Cabela's 2008 Annual Report Download - page 91

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86
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows for the
years ended:
2008 2007 2006
Statutory federal rate 35.0%35.0%35.0%
State income taxes, net of federal tax benefit 1.7 1.8 1.8
Other nondeductible items 0.1 0.1 0.1
Change in valuation allowance (0.8) - -
Other, net (0.6) - 0.6
35.4% 36.9% 37.5%
Deferred tax assets and liabilities consisted of the following for the years ended:
2008 2007
Deferred tax assets:
Deferred compensation $ 5,820 $5,547
Deferred revenue 4,589 3,744
Reserve for returns 5,607 7,550
Accrued expenses 5,506 5,121
Gift certificates liability 5,514 3,401
Allowance for doubtful accounts 3,337 2,505
Economic development bonds 3,684 484
Other 3,560 3,139
37,617 31,491
Deferred tax liabilities:
Prepaid expenses 17,321 17,773
Property and equipment 52,094 34,519
Inventories 10,181 14,902
Retained interests in securitized loans 8,414 10,050
Other 21 45
88,031 77,289
Valuation allowance - (916)
Net deferred tax liability (50,414) (46,714)
Less current deferred income taxes 11,707 15,601
Long-term deferred income taxes $ (38,707) $ (31,113)
Effective April 1, 2008, we completed a legal entity restructuring by merging certain subsidiaries resulting in
the major selling channels (catalog, Internet, and retail) residing in a single legal entity. Prior to the restructuring,
state net operating losses were being carried forward. Under the previous operating structure, the losses were likely
to have expired unused, therefore a full valuation allowance was established. The surviving entity in the restructuring
is anticipated to generate sufficient taxable income to fully recognize the tax benefit of these net operating losses.
Accordingly, in the second quarter of 2008, we reversed the state net operating losses valuation allowance of $916.