GNC 2008 Annual Report Download - page 86

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Successor Predecessor
March 16- January 1-
December 31, March 15, Year ended December 31,
2007 2007 2006 2005
(in thousands)
Domestic $ 25,607 $ (63,672) $ 56,453 $ 26,435
Foreign 5,977 1,661 3,148 3,112
Total income before income
taxes $ 31,584 $ (62,011) $ 59,601 $ 29,547
Income tax expense/(benefit) for all periods consisted of the following components:
Successor Predecessor
Period
March 16- Period January 1-
December 31, March 15, Year ended December 31,
2007 2007 2006 2005
(in thousands)
Current:
Federal $ — $ (21,547) $ 21,675 $ 7,024
State 462 (279) 2,299 1,255
Foreign 2,835 444 1,840 1,281
3,297 (21,382) 25,814 9,560
Deferred:
Federal 8,266 9,984 (3,695) 1,172
State 1,037 701 107 149
Foreign — — — —
9,303 10,685 (3,588) 1,321
Income tax expense (benefit) $ 12,600 $ (10,697) $ 22,226 $ 10,881
The following table summarizes the differences between the Company's effective tax rate for financial reporting purposes and the federal
statutory tax rate.
Successor Predecessor
March 16- January 1-
December 31, March 15, Year ended December 31,
2007 2007 2006 2005
Percent of pretax earnings:
Statutory federal tax rate 35.0% 35.0% 35.0% 35.0%
Increase/(decrease):
Other permanent differences 2.0% (17.4%) (1.1%) (2.4%)
State income tax, net of
federal tax benefit 3.1% (0.4%) 3.5% 3.9%
Other (0.2%) 0.1% (0.1%) 0.3%
Effective income tax rate 39.9% 17.3% 37.3% 36.8%
In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement
No. 109," ("FIN 48") which applies to all open tax positions 82