Supercuts 2005 Annual Report Download - page 88

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Additionally, President Bush signed into law the American Jobs Creation Act of 2004 (Act) on October 22, 2004. The Act creates, among
other things, a temporary incentive for United States (U.S.) multinational companies to repatriate accumulated income earned outside the U.S.
at an effective U.S. income tax rate as low as 5.25 percent as long as the repatriated income is invested in the U. S. pursuant to a plan. On
January 13, 2005, the Internal Revenue Service issued its guidelines for applying the repatriation provisions of the Act, including guidance on
qualifying dividends and qualifying reinvestment plans. The Company has completed an evaluation of the repatriation provisions and Treasury
guidance and has determined that there is no advantage to electing repatriation under the Act.
The fiscal year 2005 income tax rate was adversely affected by the goodwill impairment write-down which is not deductible for tax
purposes. Under the accounting rules, this is considered a discrete event, the effects of which are fully recognized in the period in which the
event occurred. Exclusive of the write-down, the tax rate for the year ended June 30, 2005 was 33.5 percent.
The components of the net deferred tax asset (liability) are as follows:
The components of income before income taxes are as follows:
87
2005
2004
(Dollars in thousands)
Net current deferred tax asset:
Insurance
$
3,955
$
5,752
Payroll and payroll related costs
7,027
4,902
Nonrecurring items
368
382
Reserve for impaired assets
2,389
2,351
Accrued litigation
—
—
Deferred franchise fees
411
767
Other, net
3,079
1,131
$
17,229
$
15,285
Net noncurrent deferred tax liability:
Depreciation and amortization
$
(101,372
)
$
(56,786
)
Deferred rent
12,130
7,297
Payroll and payroll related costs
12,905
10,168
Derivatives
3,180
3,367
Other, net
(506
)
(257
)
$
(73,663
)
$
(36,211
)
2005
2004
2003
(Dollars in thousands)
Income before income taxes:
United States
$
133,054
$
139,017
$
125,079
International
(16,597
)
23,822
11,695
$
116,457
$
162,839
$
136,774