Dillard's 2002 Annual Report Download - page 40

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6. Income Taxes
The provision for federal and state income taxes is summarized as follows:
Fiscal Fiscal Fiscal
(in thousands of dollars) 2002 2001 2000
Current:
Federal $47,784 $41,869 $48,203
State 2,134 1,871 2,152
49,918 43,740 50,355
Deferred:
Federal 23,574 1,694 (5,459)
State 1,308 351 (866)
24,882 2,045 (6,325)
$74,800 $45,785 $44,030
A reconciliation between the Company’s income tax provision and income taxes using the federal statutory income tax rate is
presented below:
Fiscal Fiscal Fiscal
(in thousands of dollars) 2002 2001 2000
Income tax at the
statutory federal rate $73,885 $39,050 $49,301
State income taxes,
net of federal benefit 2,076 1,226 1,612
Nondeductible
goodwill amortization - 5,461 8,761
Impact of reduced effective income
tax rate on deferred taxes - - (15,693)
Other (1,161) 48 49
$74,800 $45,785 $44,030
In connection with the gain on the early extinguishment of debt and the loss on the cumulative effect of an accounting change, the
Company realized income tax expense of $15.4 million and income tax benefit of $73.1 million, respectively, in 2000. Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The Company’s actual federal and state income tax rate (exclusive
of the effect of non-deductible goodwill amortization) was 36% in fiscal 2002 and 2001. The Company’s actual federal and state
income tax rate was reduced from 37% in fiscal 1999 to 36% in fiscal 2000, as a result of lower effective combined income tax rates.
The effect of these reduced rates on the Company’s deferred income taxes was to reduce the income tax provision by $16 million in
fiscal 2000. Significant components of the Company’s deferred tax assets and liabilities as of February 2, 2002 and February 3, 2001
are as follows:
(in thousands of dollars) February 1, 2003 February 2, 2002
Property and equipment
bases and depreciation
differences $643,703 $654,994
State income taxes 25,612 24,538
Joint venture basis differences 17,341 46,571
Differences between
book and tax bases of inventory 45,287 (11,337)
Other 3,554 5,127
Total deferred tax liabilities 735,497 719,893
Accruals not currently deductible (72,657) (73,320)
State income taxes (2,641) (2,608)
Total deferred tax assets (75,298) (75,928)
Net deferred tax liabilities $660,199 $643,965
F-14