Advance Auto Parts 2015 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2015 Advance Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

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-31
Temporary differences which give rise to significant deferred income tax assets (liabilities) are as follows:
January 2,
2016
January 3,
2015
Deferred income tax assets (liabilities):
Property and equipment $ (171,378)$ (181,511)
Inventory valuation differences (190,756)(156,703)
Accrued expenses not currently deductible for tax 67,725 48,684
Share-based compensation 20,902 13,721
Accrued medical and workers compensation 44,152 44,674
Net operating loss carryforwards 5,907 7,233
Straight-line rent 26,626 21,431
Intangible assets (240,501)(255,050)
Other, net 3,398 11,170
Total deferred income tax assets (liabilities) $ (433,925)$ (446,351)
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, 2016, January 3, 2015 and December 28, 2013:
January 2,
2016
January 3,
2015
December 28,
2013
Unrecognized tax benefits, beginning of period $ 14,033 $ 18,458 $ 16,708
Increases related to prior period tax positions 412 — —
Decreases related to prior period tax positions (2,120)(4,841)(1,313)
Increases related to current period tax positions 3,137 4,329 3,678
Settlements (582)(2,345)—
Expiration of statute of limitations (1,039)(1,568)(615)
Unrecognized tax benefits, end of period $ 13,841 $ 14,033 $ 18,458
As of January 2, 2016, January 3, 2015 and December 28, 2013, the entire amount of unrecognized tax benefits, if
recognized, would reduce the Company’s annual effective tax rate.
The Company provides for potential interest and penalties associated with uncertain tax positions as a part of income tax
expense. During 2015, the Company recorded potential interest and penalties related to uncertain tax positions of $149. During
2014, the Company recognized a benefit from interest and penalties of $3,684. During 2013, the Company recorded potential
interest and penalties related to uncertain tax positions of $818. As of January 2, 2016, the Company had recorded a liability for
potential interest and penalties of $1,815 and $134, respectively. As of January 3, 2015, the Company had recorded a liability
for potential interest and penalties of $1,759 and $138, respectively. 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 significantly over the next 12 months.
During the next 12 months, it is possible the Company could conclude on approximately $2,000 to $3,000 of the
contingencies associated with unrecognized tax uncertainties due mainly to the conclusion of audits and the expiration of
statutes of limitations. The majority of these resolutions would be achieved through the completion of current income tax
examinations.