AutoZone 2013 Annual Report Download - page 115

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53
Significant components of the Company's deferred tax assets and liabilities were as follows:
(in thousands)
August 31,
2013
August 25,
2012
Deferred tax assets:
Net operating loss and credit carryforwards ................................................
.
$ 41,785 $ 36,605
Insurance reserves .......................................................................................
.
16,237 18,185
Accrued benefits ..........................................................................................
.
67,350 63,320
Pension ........................................................................................................
.
18,004 43,904
Other ............................................................................................................
.
45,597 41,658
Total deferred tax assets ...........................................................................
.
188,973 203,672
Less: Valuation allowances .....................................................................
.
(11,593) (9,532)
177,380 194,140
Deferred tax liabilities:
Property and equipment ...............................................................................
.
(84,512) (67,480)
Inventory .....................................................................................................
.
(262,653) (244,414)
Other ............................................................................................................
.
(27,341) (31,437)
Total deferred tax liabilities ....................................................................
.
(374,506) (343,331)
Net deferred tax liability .................................................................................
.
$ (197,126) $ (149,191)
Deferred taxes are not provided for temporary differences of approximately $260.0 million at August 31, 2013,
and $195.8 million at August 25, 2012, representing earnings of non-U.S. subsidiaries that are intended to be
permanently reinvested. Computation of the potential deferred tax liability associated with these undistributed
earnings and other basis differences is not practicable.
At August 31, 2013 and August 25, 2012, the Company had deferred tax assets of $8.7 million and $12.3 million,
respectively, from net operating loss (“NOL”) carryforwards available to reduce future taxable income totaling
approximately $75.5 million and $76.6 million, respectively. Certain NOLs have no expiration date and others
will expire, if not utilized, in various years from fiscal 2014 through 2032. At August 31, 2013 and August 25,
2012, the Company had deferred tax assets for income tax credit carryforwards of $33.1 million and $24.3
million, respectively. Certain income tax credit carryforwards have no expiration and others will expire, if not
utilized, in various years from fiscal 2014 through 2027.
At August 31, 2013 and August 25, 2012, the Company had a valuation allowance of $11.6 million and $9.5
million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which
management has determined it is more likely than not that the deferred tax asset will not be realized. The $2.1
million net increase in the valuation allowance during fiscal 2013 related to increases from certain NOLs and tax
credits arising in fiscal 2013 and decreases due to NOL expirations. Management believes it is more likely than
not that the remaining deferred tax assets will be fully realized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands)
August 31,
2013
August 25,
2012
Beginning balance ...........................................................................................
.
$ 27,715 $ 29,906
Additions based on tax positions related to the current yea
r
.......................
.
7,015 6,869
Additions for tax positions of prior years....................................................
.
2,758 44
Reductions for tax positions of prior years..................................................
.
(470) (1,687)
Reductions due to settlements .....................................................................
.
(3,019) (4,586)
Reductions due to statu
t
e of limitations.......................................................
.
(3,356) (2,831)
Ending balance ................................................................................................
.
$ 30,643 $ 27,715
Included in the August 31, 2013 balance is $20.1 million of unrecognized tax benefits that, if recognized, would
reduce the Company’s effective tax rate.
10-K