Pep Boys 2007 Annual Report Download - page 121
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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2008, February 3, 2007 and January 28, 2006
(dollar amounts in thousands, except share data)
NOTE 14—INCOME TAXES
A reconciliation of the statutory federal income tax rate to the effective rate of the benefit for
income taxes follows:
Year ended
February 2, February 3, January 28,
2008 2007 2006
Statutory tax rate .............................. 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits .......... 3.1 (3.6) 0.9
Job credits ................................... 0.9 5.8 0.8
State deferred adjustment(a) ...................... — 18.2 —
FIN 48 adjustment ............................. 4.2 — —
Foreign taxes, net of federal benefits ................ 1.0 (3.8) —
Other, net ................................... (3.6) (4.1) (0.2)
40.6% 47.5% 36.5%
(a) The tax rate for the year ended February 2007 includes an adjustment to the state deferred liabilities
primarily due to change in the Company’s filing position in certain states. Based on the new filing
position, the Company has recorded certain tax attributes that were not recognized previously.
Items that gave rise to significant portions of the deferred tax accounts are as follows:
February 2, February 3,
2008 2007
Deferred tax assets:
Employee compensation ................................ $ 9,399 $ 8,227
Store closing reserves .................................. 2,388 741
Legal .............................................. 2,856 2,193
Benefit accruals ...................................... 3,224 1,998
Net operating loss carryforwards .......................... 20,424 46,831
Tax credit carryforwards ................................. 16,341 13,944
Accrued leases ....................................... 12,515 12,937
Interest rate derivatives ................................. 4,078 1,305
Deferred gain on sale leaseback ........................... 32,280 —
Other .............................................. 5,458 3,566
Gross deferred tax assets ................................ 108,963 91,742
Valuation allowance .................................... (4,077) (4,077)
$104,886 $87,665
Deferred tax liabilities:
Depreciation ......................................... $ 36,582 $51,017
Inventories .......................................... 31,490 37,544
Real estate tax ....................................... 2,610 2,414
Insurance ........................................... 810 793
Other .............................................. 782 —
$ 72,274 $91,768
Net deferred tax asset .................................... $ 32,612 $ —
Net deferred tax liability .................................. $ — $ 4,103
75
10-K