Advance Auto Parts 2015 Annual Report Download - page 84

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 2, 2016, January 3, 2015 and December 28, 2013
(in thousands, except per share data)
F-30
The provision for income taxes differed from the amount computed by applying the federal statutory income tax
rate due to:
January 2,
2016
January 3,
2015
December 28,
2013
Income before provision for income taxes at
statutory U.S. federal income tax rate (35%) $ 263,511 $ 273,488 $ 219,239
State income taxes, net of federal income tax
benefit 20,297 15,723 16,216
Other, net (4,318)(1,642)(815)
$ 279,490 $ 287,569 $ 234,640
Deferred Income Tax Assets (Liabilities)
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. The Company retrospectively adopted ASU 2015-17 during the
fourth quarter of 2015, which requires the presentation of all deferred taxes as long-term assets or liabilities. As of January 3,
2015, the Company reclassified $88,650 from current to long-term deferred income tax liabilities as a result of this adoption.
Net deferred income tax balances are comprised of the following:
January 2,
2016
January 3,
2015
Deferred income tax assets $ 171,571 $ 151,997
Valuation allowance (2,861)(5,084)
Deferred income tax liabilities (602,635)(593,264)
Net deferred income tax liabilities $ (433,925)$ (446,351)
As of January 2, 2016 and January 3, 2015, the Company had deferred income tax assets of $386 and $1,297 from federal
net operating losses, or NOLs, of $1,103 and $3,705, and deferred income tax assets of $5,521 and $6,847 from state NOLs of
$145,809 and $165,849, respectively. These NOLs may be used to reduce future taxable income and expire periodically
through Fiscal 2035. Due to uncertainties related to the realization of certain deferred tax assets for NOLs in certain
jurisdictions, the Company recorded a valuation allowance of $2,861 and $5,084 as of both January 2, 2016 and January 3,
2015. The amount of deferred income tax assets realizable, however, could change in the future if projections of future taxable
income change. As of January 2, 2016 and January 3, 2015, the Company had cumulative net deferred income tax liabilities of
$433,925 and $446,351, respectively.
The Company has not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely invested
outside of the U.S. These accumulated net earnings relate to certain ongoing operations for multiple years and were approximately
$114 as of January 2, 2016. It is not practicable to determine the income tax liability that would be payable if such earnings were
repatriated.