Dillard's 2009 Annual Report Download - page 64

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Income Taxes (Continued)
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) 2009 2008 2007
Income tax at the statutory federal rate (inclusive of equity in (losses)
earnings of joint ventures) ............................... $28,427 $(133,555) $23,370
State income taxes, net of federal benefit (inclusive of equity in
(losses) earnings of joint ventures) ......................... (89) (6,538) 1,585
Net changes in unrecognized tax benefits, interest, and penalties /
reserves ............................................. (6,334) 2,495 (5,867)
Tax benefit of federal credits ............................... (2,405) (4,069) (3,340)
Nondeductible goodwill write off ............................ — 11,680 933
Changes in cash surrender value of life insurance policies .......... (795) (803) (914)
Changes in valuation allowance ............................. (4,024) (10,492) (1,733)
Changes in tax rate ...................................... (1,317) — —
Other ................................................ (773) 762 307
Tax benefit of state restructuring ............................ — — (1,331)
$12,690 $(140,520) $13,010
During fiscal 2009, income taxes included the net decrease in unrecognized tax benefits, interest,
and penalties of approximately $6.3 million and included the recognition of tax benefits of
approximately $1.3 million for a decrease in deferred liabilities due to a decrease in the state effective
tax rate, approximately $4.4 million for a decrease in a capital loss valuation allowance resulting from
capital gain income, and approximately $2.4 million due to federal tax credits. During fiscal 2009, the
Company reached a settlement with a state taxing jurisdiction which resulted in a reduction in
unrecognized tax benefits, interest, and penalties.
During fiscal 2008, income taxes included the net increase in unrecognized tax benefits, interest,
and penalties of approximately $2.5 million and included the recognition of tax benefits of
approximately $10.5 million for a decrease in a capital loss valuation allowance resulting from capital
gain income and approximately $4.1 million due to federal tax credits.
During fiscal 2007, income taxes included the net decrease in unrecognized tax benefits, interest,
and penalties of approximately $5.9 million, and a recognition of tax benefits of approximately
$1.7 million for a decrease in a capital loss valuation allowance resulting from capital gain income,
approximately $1.3 million for a reduction in state tax liabilities due to a restructuring that occurred
during this period and approximately $3.3 million due to federal tax credits. In fiscal 2007, the
Company reached a settlement with a state taxing jurisdiction which necessitated changes in
unrecognized tax benefits, interest, and penalties.
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
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