AutoZone 2011 Annual Report Download - page 113

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is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss
coverage for each self-insured plan in order to limit its liability for large claims. The limits are per claim and are
$1.5 million for workers’ compensation and property, $0.5 million for employee health, and $1.0 million for
general, products liability, and vehicle.
Note D – Income Taxes
The provision for income tax expense consisted of the following:
Year Ended
(in thousands)
August 27,
2011
August 28,
2010
August 29,
2009
Current:
Federal ................................................................................ $ 391,132 $ 397,062 $ 303,929
State .................................................................................... 39,473 34,155 26,450
430,605 431,217 330,379
Deferred:
Federal ................................................................................ 49,698 (3,831) 46,809
State .................................................................................... (5,031) (5,192) (491)
44,667 (9,023) 46,318
Income tax expense ................................................................ $ 475,272 $ 422,194 $ 376,697
A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax
rate of 35% to income before income taxes is as follows:
Year Ended
(in thousands)
August 27,
2011
August 28,
2010
August 29,
2009
Federal tax at statutory U.S. income tax rate .......................... 35.0% 35.0% 35.0%
State income taxes, net ........................................................... 1.7% 1.6% 1.6%
Other ....................................................................................... (0.8%) (0.2%) (0.2%)
Effective tax rate ..................................................................... 35.9% 36.4% 36.4%
Significant components of the Company's deferred tax assets and liabilities were as follows:
(in thousands)
August 27,
2011
August 28,
2010
Deferred tax assets:
Net operating loss and credit carryforwards ...................................................
.
$ 31,772 $ 25,781
Insurance reserves ...........................................................................................
.
17,542 20,400
Accrued benefits .............................................................................................
.
61,436 50,991
Pension ............................................................................................................
.
30,967 34,965
Other ...............................................................................................................
.
39,878 34,764
Total deferred tax assets ..............................................................................
.
181,595 166,901
Less: Valuation allowances ........................................................................
.
(7,973) (7,085)
173,622 159,816
Deferred tax liabilities:
Property and equipment ..................................................................................
.
(64,873) (35,714)
Inventory .........................................................................................................
.
(220,234) (205,000)
Other ...............................................................................................................
.
(44,303) (19,850)
(329,410) (260,564)
Net deferred tax liability .....................................................................................
.
$ (155,788) $ (100,748)
51
10-K