Jack In The Box 2005 Annual Report Download - page 59

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)
7. INCOME TAXES (continued)
A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
2005 2004 2003
Computed at federal statutory rate ................................................. 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit................................. 3.0 3.2 2.8
Benefit of jobs tax credits .............................................................. (1.4) (1.2) (1.3)
Adjustment to estimated tax accruals............................................. (2.7) – (.6)
Other, net ....................................................................................... (0.1) (.6) .2
33.8% 36.4% 36.1%
In 2005, the favorable tax rate related primarily to the resolution of a prior year’ s tax position and to certain tax planning
strategies. The lower rates in 2004 and 2003 resulted from additional tax credits obtained as well as favorable resolutions
of long-standing tax matters.
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax
liabilities at each year-end are presented below:
2005 2004
Deferred tax assets:
Accrued pension and post retirement benefits.......................................................... $ 29,351 $ 11,478
Accrued insurance.................................................................................................... 17,937 17,140
Accrued vacation pay expense................................................................................. 12,458 12,282
Deferred income....................................................................................................... 5,643 11,067
Other reserves and allowances................................................................................. 7,213 8,707
Tax loss and tax credit carryforwards ...................................................................... 2,571 251
Other, net ................................................................................................................. 16,038 10,225
Total gross deferred tax assets ................................................................................. 91,211 71,150
Valuation allowance..................................................................................................... (2,320) –
Total net deferred tax assets......................................................................................... 88,891 71,150
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation .................. 87,899 92,971
Intangible assets....................................................................................................... 21,512 19,959
Total gross deferred tax liabilities............................................................................ 109,411 112,930
Net deferred tax liabilities........................................................................................ $ 20,520 $ 41,780
At October 2, 2005 and October 3, 2004, current deferred tax assets of $38,340 and $36,706, respectively, are included in
other current assets, and non-current deferred tax liabilities of $58,860 and $78,486, respectively, are included in other
non-current liabilities.
Deferred tax assets at October 2, 2005 include state net operating loss carryforwards of approximately $39,600 expiring at
various times between 2010 and 2025. At October 2, 2005, the Company recorded a valuation allowance of $2,320 related
to these state net operating losses. The Company believes that it is more likely than not that these loss carryforwards will
not be realized. Management believes that the remaining deferred tax assets will be realized through future taxable income
or alternative tax strategies.
From time-to-time, we may take positions for filing our tax returns, which may differ from the treatment of the same item
for financial reporting purposes. The ultimate outcome of these items will not be known until such time as the IRS has
completed its examination or until the statute of limitations has expired.
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