Big Lots 2008 Annual Report Download - page 134

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The valuation allowances shown in the table above include a valuation allowance for unrealized capital losses
which may not be deductible when realized and state income tax valuation allowances that are net of the federal
tax benefit. These valuation allowances reflect that it is more likely than not that a portion of the federal and
state deferred tax assets may not be realized.
Net deferred tax assets are shown separately on our consolidated balance sheets as current and noncurrent
deferred income taxes. The following table summarizes net deferred income tax assets from the balance sheet:
January 31, 2009 February 2, 2008
(In thousands)
Current deferred income taxes ..................................... $45,275 $ 53,178
Noncurrent deferred income taxes .................................. 53,763 51,524
Net deferred tax assets ......................................... $99,038 $104,702
We have the following income tax loss and credit carryforwards at January 31, 2009 (amounts are shown net of
tax excluding the federal income tax effect of the state and local items):
(In thousands)
Federal:
Foreign tax credits .............................. $ 233 Expires fiscal year 2010
State and local:
State net operating loss carryforwards ............... 3,951 Expires fiscal years 2014 through 2025
California enterprise zone credits................... 662 No expiration date
Texas business loss credits ........................ 292 Expires fiscal years 2009 through 2025
New Jersey alternative minimum tax credits .......... 135 No expiration date
Total income tax loss and credit carryforwards ..... $5,273
Income taxes payable on our consolidated balance sheets have been reduced by the tax benefits primarily
associated with share-based compensation. We receive an income tax deduction calculated as the difference
between the fair market value of the shares issued at the time of exercise and the option price for non-qualified
options and the value of shares issued upon vesting for restricted stock awards. Tax benefits of $4.6 million in
2008, $19.8 million in 2007, and $11.9 million in 2006 were credited directly to shareholders’ equity related to
share-based compensation deductions in excess of expense recognized for these awards.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2008 and 2007:
2008 2007
(In thousands)
Unrecognized tax benefits — opening balance .............. $37,158 $38,326
Gross increases — tax positions in current year.............. 9,094 9,346
Gross increases — tax positions in prior period.............. 1,611 2,762
Gross decreases — tax positions in prior period ............. (4,617) (3,301)
Settlements........................................... (7,147) (9,284)
Lapse of statute of limitations............................ (1,370) (691)
Unrecognized tax benefits — end of year ................ $34,729 $37,158
Included in the balance of unrecognized tax benefits at the end of 2008 and 2007 were 1) $21.0 million and
$22.6 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate, 2) $7.9 million
and $8.0 million of tax positions for which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility, and 3) $5.8 million and $6.6 million, respectively, for the
federal deferred tax benefits related to state unrecognized tax benefits. The uncertain timing items could result
Note 9 — Income Taxes (Continued)