Barnes and Noble 2005 Annual Report Download - page 36

10. INCOME TAXES
The Company files a consolidated federal return with
all 80% or more owned subsidiaries. Federal and state
income tax provisions (benefits) for fiscal 2005, 2004
and 2003 are as follows:
Fiscal Year 2005 2004 2003
Current:
Federal $ 90,738 59,725 40,042
State 9,379 12,991 7,286
Total current 100,117 72,716 47,328
Deferred:
Federal (6,638) 20,647 26,580
State 8,563 638 4,871
Total deferred 1,925 21,285 31,451
Total $ 102,042 94,001 78,779
A reconciliation between the effective income tax rate
and the federal statutory income tax rate is as follows:
Fiscal Year 2005 2004 2003
Federal statutory income
tax rate 35.00 % 35.00 % 35.00 %
State income taxes,
net of federal income
tax benefit 4.54 4.58 4.43
Prior year taxes — 1.86 0.45
Other, net 1.21 1.56 1.47
Effective income tax rate 40.75 % 43.00 % 41.35 %
---
The tax effects of temporary differences that give rise
to significant components of the Company’s deferred
tax assets and liabilities as of January 28, 2006 and
January 29, 2005 are as follows:
January 28, January 29,
2006 2005
Deferred tax liabilities:
Investment in Barnes & Noble.com $ (102,691) (93,629)
Depreciation (40,067) (80,762)
Operating expenses (15,357) (5,937)
Goodwill and intangible asset
amortization (11,793) (13,319)
Other (3,483) (6,308)
Total deferred tax liabilities (173,391) (199,955)
Deferred tax assets:
Loss carryover 48,188 55,413
Lease transactions 47,836 40,848
Inventory 11,723 25,820
Estimated accruals 14,684 21,962
Investments in equity securities 10,914 16,465
Insurance liability 8,022 8,283
Pension 7,108 7,749
Total deferred tax assets 148,475 176,540
Net deferred tax liabilities $ (24,916) (23,415)
Balance Sheet caption reported in:
Prepaid expenses and other
current assets $ 34,429 53,309
Deferred taxes (assets) 114,046 123,231
Accrued liabilities (15,356) (6,212)
Deferred taxes (liabilities) (158,035) (193,743)
Net deferred tax liabilities $ (24,916) (23,415)
At January 28, 2006, bn.com, a wholly owned
subsidiary of the Company, had federal and state net
operating loss (NOL) carryforwards of approximately
$119,000 that expire beginning in 2018 through 2022
if not utilized. Due to the change in ownership of
bn.com resulting from the Merger described in Note 3
above, the utilization of these NOL carryforwards in
the Company’s consolidated tax returns is limited to
approximately $6,700 on an annual basis.
The Company has additional state NOL carryforwards
of approximately $41,000 that expire beginning in
2006 through 2012.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
35 2005 Annual Report Barnes & Noble, Inc.