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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS –(Continued)
YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
50
NOTE 12: INCOME TAXES
The components of income (loss) before income taxes were as follows:
December 31,
2004
2003
2002
(in thousands)
U.S. operations..................................................................................
$ 27,480
$ 28,087 $ 17,087
Foreign operations ............................................................................
3,057
3,041 (1,129)
Total income (loss) before income taxes.................................
$ 30,537
$ 31,128 $ 15,958
The components of income tax expense (benefit) were as follows:
December 31,
2004
2003
2002
(in thousands)
Current:
U.S. Federal............................................................................. $ 382
$ 600 $ —
State and local ......................................................................... 170
400 —
Foreign .................................................................................... 1,020
15 —
Total current .................................................................. 1,572
1,015 —
Deferred:
U.S. Federal............................................................................. 7,817
9,883 (36,654)
State and local ......................................................................... 1,360
675 (5,901)
Foreign .................................................................................... (580
)
— —
Total deferred ................................................................ 8,597
10,558 (42,555)
Total tax expense .............................................................................. $ 10,169
$ 11,573 $ (42,555)
The income tax expense (benefit) differs from the amount that would result by applying the U.S. statutory rate to
income (loss) before income taxes. A reconciliation of the difference follows:
December 31,
2004
2003
2002
U.S. federal tax expense at the statutory rate.............................
35.0%
35.0%
34.0%
State income taxes, net of federal benefit ..................................
3.4%
3.6%
3.9%
Research and development credits.............................................
—
—
(1.3)%
Non-deductible foreign expenses...............................................
—
0.5%
1.3%
Other..........................................................................................
0.2%
0.9%
1.6%
Change in valuation allowance for deferred tax asset................
(1.9)%
(1.8)%
(306.2)%
Recognition of net deferred tax assets at an adjusted rate .........
(3.4)%
(1.0)%
—
33.3%
37.2%
(266.7)%