Advance Auto Parts 2005 Annual Report Download - page 54

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the Years Ended December 31, 2005, January 1, 2005 and January 3, 2004 (in thousands, except per share data)
During the prior repurchase program, the Company
repurchased 7,029,900 shares of common stock at an
aggregate cost of $189,160, or an average price of
$26.91 per share, excluding related expenses.
During the third quarter of fiscal 2005, the
Company also retired 7,121,850 shares of common
stock, of which 91,950 shares were repurchased
under the $300,000 stock repurchase plan and
7,029,900 shares were repurchased under the prior
$200,000 stock repurchase program.
15. INCOME TAXES:
Provision (benefit) for income taxes from continu-
ing operations for fiscal 2005, fiscal 2004 and fiscal
2003 consists of the following:
Current Deferred Total
2005–
Federal............................ $124,978 $ (1,343) $123,635
State................................ 16,430 4,133 20,563
$141,408 $ 2,790 $144,198
2004 –
Federal............................ $102,171 $ 1,318 $103,489
State................................ 9,042 5,190 14,232
$111,213 $ 6,508 $117,721
2003–
Federal............................ $ 23,759 $44,820 $ 68,579
State................................ 923 8,922 9,845
$ 24,682 $53,742 $ 78,424
The provision (benefit) for income taxes from
continuing operations differed from the amount
computed by applying the federal statutory income
tax rate due to:
2005 2004 2003
Income from continuing
operations at statutory U.S.
federal income tax rate ......... $132,623 $107,012 $71,298
State income taxes, net of
federal income tax benefit .... 13,366 9,251 6,399
Non-deductible interest &
other expenses....................... (3) 745 1,263
Valuation allowance................... 75 236 (1,002)
Other, net ................................... (1,863) 477 466
$144,198 $117,721 $78,424
During the years ended January 1, 2005 and
January 3, 2004, the Company had a loss from oper-
ations of the discontinued Wholesale Dealer Network
of $63 and $572, respectively. The Company record-
ed an income tax benefit of $24 and $220 related to
these discontinued operations for the years ended
January 1, 2005 and January 3, 2004, respectively.
Deferred income taxes are recognized for the tax
consequences in future years of differences between
the tax bases of assets and liabilities and their finan-
cial reporting amounts at each period-end, based on
enacted tax laws and statutory income tax rates appli-
cable to the periods in which the differences are
expected to affect taxable income. Deferred income
taxes reflect the net income tax effect of temporary
differences between the bases of assets and liabilities
for financial reporting purposes and for income tax
reporting purposes. Net deferred income tax balances
are comprised of the following:
December 31, January 1,
2005 2005
Deferred income tax assets............... $ 42,167 $ 40,009
Valuation allowance.......................... (1,104) (1,029)
Deferred income tax liabilities ......... (113,150) (108,277)
Net deferred income tax liabilities ... $ (72,087) $ (69,297)
At December 31, 2005 and January 1, 2005, the
Company has cumulative net deferred income tax
liabilities of $72,087 and $69,297, respectively. The
gross deferred income tax assets also include state
net operating loss carryforwards, or NOLs, of
approximately $1,579 and $3,720, respectively.
These NOLs may be used to reduce future taxable
income and expire periodically through fiscal year
2024. The Company believes it will realize these tax
benefits through a combination of the reversal of
temporary differences, projected future taxable
income during the NOL carryforward periods and
available tax planning strategies. Due to uncertainties
related to the realization of certain deferred tax assets
for NOLs in various jurisdictions, the Company
recorded a valuation allowance of $1,104 as of
December 31, 2005 and $1,029 as of January 1,
2005. The amount of deferred income tax assets real-
izable, however, could change in the near future if
estimates of future taxable income are changed.