Aarons 2013 Annual Report Download - page 67

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As a result of the bonus depreciation provisions in the Small Business Jobs Act of 2010 and the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010, the Company paid more than anticipated for the 2010 federal tax
liability. The 2010 acts provided an estimated tax deferral of approximately $127.0 million. The Company filed for a refund of
overpaid federal tax of approximately $80.9 million in January 2011 and received that refund in February 2011.
Significant components of the Company’s deferred income tax liabilities and assets at December 31 are as follows:
(In Thousands) 2013 2012
Deferred Tax Liabilities:
Lease Merchandise and Property, Plant and Equipment $ 249,192 $ 279,926
Goodwill & Other Intangibles 34,512 30,754
Other, Net 2,782 3,260
Total Deferred Tax Liabilities 286,486 313,940
Deferred Tax Assets:
Accrued Liabilities 36,778 25,365
Advance Payments 15,400 15,834
Other, Net 8,032 9,677
Total Deferred Tax Assets 60,210 50,876
Less Valuation Allowance (682) (657)
Net Deferred Tax Liabilities $ 226,958 $ 263,721
The Company’s effective tax rate differs from the statutory United States Federal income tax rate for the years ended
December 31 as follows:
2013 2012 2011
Statutory Rate 35.0% 35.0% 35.0%
Increases in United States Federal Taxes
Resulting From:
State Income Taxes, Net of Federal Income Tax Benefit 3.1 2.5 2.7
Federal Tax Credits (1.7) (.1) (.3)
Other, Net (1.6) .1 .6
Effective Tax Rate 34.8% 37.5% 38.0%
The Company files a federal consolidated income tax return in the United States and the separate legal entities file in various
states and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax
examinations by tax authorities for years before 2010.
The following table summarizes the activity related to the Company’s uncertain tax positions:
(In Thousands) 2013 2012 2011
Balance at January 1, $ 1,258 $ 1,412 $ 1,315
Additions based on tax positions related to the current year 454 178 178
Additions for tax positions of prior years 423 83 22
Prior year reductions (5) (315) (13)
Statute expirations (85) (83) (90)
Settlements (85) (17) —
Balance at December 31, $ 1,960 $ 1,258 $ 1,412
As of December 31, 2013 and 2012, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate
is $1.5 million and $1.0 million, respectively, including interest and penalties. During the years ended December 31, 2013 and
December 31, 2011, the Company recognized interest and penalties of $76,000 and $41,000. During the year ended
December 31, 2012, the Company recognized a net benefit of $126,000 related to interest and penalties. The Company had
$278,000 and $234,000 of accrued interest and penalties at December 31, 2013 and 2012, respectively. The Company
recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense.