Advance Auto Parts 2007 Annual Report Download - page 84

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
December 29, 2007, December 30, 2006 and December 31, 2005
(in thousands, except per share data)
Provision (benefit) for income taxes from continuing operations for fiscal 2007, fiscal 2006 and fiscal 2005
consists of the following:
Current Deferred Total
2007-
Federal 143,726$ (17,444)$ 126,282$
State 21,126 (3,091) 18,035
164,852$ (20,535)$ 144,317$
2006-
Federal 126,726$ (4,874)$ 121,852$
State 18,433 (1,688) 16,745
145,159$ (6,562)$ 138,597$
2005-
Federal 124,978$ (1,343)$ 123,635$
State 16,430 4,133 20,563
141,408$ 2,790$ 144,198$
The provision (benefit) for income taxes from continuing operations differed from the amount computed by
applying the federal statutory income tax rate due to:
2007 2006 2005
Income from continuing operations
at statutory U.S. federal income tax rate (35%) 133,922$ 129,470$ 132,623$
State income taxes, net of federal
income tax benefit 11,723 10,884 13,366
Non-deductible expenses 1,181 1,155 (3)
Valuation allowance 221 70 75
Other, net (2,730) (2,982) (1,863)
144,317$ 138,597$ 144,198$
Deferred tax assets and liabilities are determined based on the differences between the financial statements and
tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred income taxes reflect the net income tax effect of temporary differences between the basis 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 29, December 30,
2007 2006
Deferred income tax assets 73,660$ 52,873$
Valuation allowance (1,396) (1,174)
Deferred income tax liabilities (118,404) (119,361)
Net
d
e
f
erre
d
i
ncome tax
li
a
bili
t
i
es
(
46,140
)
$
(
67,662
)
$
At December 29, 2007 and December 30, 2006, the Company has cumulative net deferred income tax liabilities
of $46,140 and $67,662, respectively. The deferred income tax assets also include state net operating loss
carryforwards, or NOLs, of approximately $3,214 and $1,752, respectively. These NOLs may be used to reduce
future taxable income and expire periodically through fiscal year 2027. Due to uncertainties related to the realization
of certain deferred tax assets for NOLs in certain jurisdictions, the Company recorded a valuation allowance of
F-25