GNC 2010 Annual Report Download - page 94

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Income tax expense/(benefit) for all periods consisted of the following components:
Successor Predecessor
Year ended Year ended March 16 - January 1
December 31, December 31, December 31, - March 15,
2009 2008 2007 2007
(in thousands)
Current:
Federal $ 10,373 $ 3,082 $ — $ (21,547)
State 6,704 3,391 462 (279)
Foreign 3,111 1,157 2,835 444
20,188 7,630 3,297 (21,382)
Deferred:
Federal 20,548 22,753 8,266 9,984
State 883 1,618 1,037 701
Foreign — — — —
21,431 24,371 9,303 10,685
Income tax expense (benefit) $ 41,619 $ 32,001 $ 12,600 $ (10,697)
For the year ended December 31, 2009, a net $0.5 million discrete tax benefit was recorded while a $2.0 million discrete tax benefit was
recorded for the year ended December 31, 2008.
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
Year ended Year ended March 16 January 1-
December 31, December 31, December 31, March 15,
2009 2008 2007 2007
Percent of pretax earnings:
Statutory federal tax rate 35.0% 35.0% 35.0% 35.0%
Increase (reduction) resulting from:
State income tax, net of federal tax benefit 2.6% 2.6% 2.3% 0.6%
Other permanent differences 0.9% 1.2% 2.0% -17.4%
International operations, net of foreign tax credits (0.6%) 0.0% 0.0% 0.0%
Federal tax credits and income deductions (1.4%) (2.5%) (0.2%) 0.1%
Tax impact of uncertain tax positions and other 0.9% 0.6% 0.8% -1.0%
Effective income tax rate 37.4% 36.9% 39.9% 17.3%
In June 2006, the FASB issued a new standard on income taxes which applies to all open tax positions accounted for in accordance with
previously issued standards on income taxes. This interpretation is intended to result in increased relevance and comparability in financial
reporting of income taxes and to provide more information about the uncertainty in income tax assets and liabilities.
The Company adopted the provisions of this standard on January 1, 2007. As a result of the implementation of the standard, the
Company recognized a $0.4 million increase in the liability for unrecognized tax benefits which was accounted for as a reduction to the
January 1, 2007 balance of retained earnings. Additionally, as a result of the implementation of the standard, the Company recorded
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