Rite Aid 2012 Annual Report Download - page 84

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 3, 2012, February 26, 2011 and February 27, 2010
(In thousands, except per share amounts)
4. Income Taxes (Continued)
The fiscal 2011 income tax expense was primarily comprised of an accrual for state and local taxes,
adjustments to unrecognized tax benefits and the need for an accrual of additional state taxes resulting
from the receipt of a final audit determination.
The fiscal 2010 income tax expense was primarily comprised of an accrual for state and local taxes
net of federal tax recoveries and adjustments to unrecognized tax benefits.
The tax effect of temporary differences that gave rise to significant components of deferred tax
assets and liabilities consisted of the following at March 3, 2012 and February 26, 2011:
2012 2011
Deferred tax assets:
Accounts receivable .......................... $ 54,119 $ 39,021
Accrued expenses ............................ 252,560 266,523
Liability for lease exit costs ..................... 158,454 175,547
Pension, retirement and other benefits ............. 218,197 188,658
Long-lived assets ............................ 298,877 233,317
Other .................................... 1,994 2,166
Credits ................................... 71,716 71,526
Net operating losses .......................... 1,584,626 1,578,714
Total gross deferred tax assets ................. 2,640,543 2,555,472
Valuation allowance .......................... (2,317,425) (2,199,302)
Total deferred tax assets ..................... 323,118 356,170
Deferred tax liabilities:
Inventory .................................. 323,118 356,170
Total gross deferred tax liabilities ............... 323,118 356,170
Net deferred tax assets ......................... $ — $ —
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
2012 2011 2010
Unrecognized tax benefits ................... $286,952 $300,707 $280,394
Increases to prior year tax positions .......... — 8,872 8,661
Decreases to tax positions in prior periods ..... (11,125) (16,940) (306)
Increases to current year tax positions ........ — 821 12,669
Settlements ............................ — (2,498) —
Lapse of statute of limitations .............. (28,105) (4,010) (711)
Unrecognized tax benefits balance ............. $247,722 $286,952 $300,707
The amount of the above unrecognized tax benefits at March 3, 2012, February 26, 2011 and
February 27, 2010 which would impact the Company’s effective tax rate, if recognized, was $83,804,
84