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F I S CAL 1999 B E S T B U Y ANNU AL R E POR T
NOT E S T O CONS OL I DAT ED F I NANCI AL S T AT E ME NT S
$ in thousands, except per share amounts
8. INCOME TAXES
Following is a reconciliation of income tax expense to the federal statutory tax rate:
1999 1998 1997
Federal income tax
at the statutory rate $ 127,7 2 8 $ 53,8 4 9 $ 1,004
State income taxes,
net of federal benefit 14,670 5,763 116
Tax exempt interest ( 3 ,232) ( 1 ,038) – –
Other 1,334 826 – –
Income tax expense $ 140,500 $ 5 9 ,400 $ 1,120
Effective tax rate 38.5% 38.6% 39.0 %
Income tax expense consists of the following:
1999 1998 1997
Current: Federal $ 120,8 92 $ 5 0,9 5 0 $ ( 5 ,1 0 0)
State 1 5,2 5 2 5 ,4 87 ( 581 )
1 36,1 4 4 56,4 37 ( 5,6 81)
Deferred: Federal 3,868 2,6 87 6,103
State 4 88 276 698
4,356 2,9 63 6,801
Income tax expense $ 140,500 $ 59,400 $ 1,120
Deferred taxes are the result of differences between the basis of assets and liabilities for financial
reporting and income tax purposes. Significant deferred tax assets and liabilities consist of the
following:
E B E B
1999 1998
Accrued expenses $ 15,69 0 $ 13,2 9 4
Deferred income 4,154 9,125
Compensation and benefits 8,052 2,554
Other 4,608 2,222
Total deferred tax assets 32,504 27,195
Property and equipment 10,973 17,067
Inventory 2,215 – –
Other 3,603 573
Total deferred tax liabilities 16,791 17,640
Net deferred tax assets $ 1 5 ,713 $ 9,555
The Internal Revenue Service has changed its original position regarding the deductibility of
interest related to the Company’s preferred securities referred to in Note 4 and has determined
that the interest is deductible for federal income tax purposes.
Income taxes paid (received) were $84,000, $12,700 and ($8,600) in fiscal 1999, 1998 and 1997,
respectively.
9. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings arising during the normal course of
conducting business. Management believes that the resolution of these proceedings will not
have any material adverse impact on the Company’s consolidated financial statements.
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