Advance Auto Parts 2009 Annual Report Download - page 85

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 2, 2010, January 3, 2009 and December 29, 2007
(in thousands, except per share data)
.
F-32
January 2, January 3,
2010 2009
Current deferred income tax assets (liabilities):
Inventory valuation differences (114,510)$ (94,373)$
Accrued medical and workers compensation 30,015 28,527
Accrued expenses not currently deductible for tax 26,674 28,394
Net operating loss carryforwards 445 510
Other, net 5,168 3,606
Total current deferred income tax assets (liabilities) (52,208)$ (33,336)$
Long-term deferred income tax assets (liabilities):
Property and equipment (95,148) (42,569)
Postretirement benefit obligation 3,042 3,612
Share-based compensation 19,872 17,562
Closed store related 5,428 -
Net operating loss carryforwards 1,612 2,071
Valuation allowance (1,273) (1,887)
Other, net 11,822 15,895
Total long-term deferred income tax assets (liabilities) (54,645)$ (5,316)$
These amounts are recorded in Other current liabilities and Other long-term liabilities in the accompanying
consolidated balance sheets, as appropriate.
Unrecognized Tax Benefits
The following table lists each category and summarizes the activity of the Company’s gross unrecognized tax
benefits for the fiscal years ended January 2, 2010, January 3, 2009 and December 29, 2007:
January 2, January 3, December 29,
2010 2009 2007
Unrecognized tax benefits, beginning of period 13,797$ 14,145$ 16,453$
Increases related to prior period tax positions 896 514 1,279
Decreases related to prior period tax positions (711) (1,280) (1,853)
Increases related to current period tax positions 1,475 1,882 5,340
Settlements (3,527) (317) (539)
Expiration of statute of limitations (817) (1,147) (271)
Unrecognized tax benefits, end of period 11,113$ 13,797$ 20,409$
As of January 2, 2010, the entire amount of unrecognized tax benefits, if recognized, would reduce the
Company’s annual effective tax rate.
The Company has chosen to provide for potential interest and penalties associated with uncertain tax positions
as a part of income tax expense. During Fiscal 2009, the Company recorded potential interest and penalties of
$1,066 and $18, respectively, related to these unrecognized tax benefits. During Fiscal 2008, the Company recorded
potential interest and penalties of $1,550 and $207, respectively. During Fiscal 2007, the Company recorded
potential interest and penalties of $1,827 and $709. As of January 2, 2010, the Company had recorded a liability for
potential interest and penalties of $3,918 and $442, respectively. As of January 3, 2009, the Company had recorded
a liability for potential interest and penalties of $5,022 and $1,743, respectively. As of December 29, 2007, the
Company had recorded a liability for potential interest and penalties of $4,421 and $1,843, respectively, which was
included in the above table. The Company has not provided for any penalties associated with tax contingencies
unless considered probable of assessment. The Company does not expect its unrecognized tax benefits to change