Circuit City 1997 Annual Report Download - page 26

The provision for income taxes consists of the following (in thousands):
Prior to the IPO, a number of the predecessor companies were S Corporations and accordingly their income was not taxable for Federal and
certain state tax purposes. Subsequent to the IPO, all of the former S Corporations terminated such status and accordingly became taxable
entities thereafter. Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations. The difference
between the income tax expense and the computed income tax based on the Federal statutory corporate rate is as follows (in thousands):
The deferred tax assets (liabilities) at December 31, 1997 and 1996 are comprised of the following:
The foreign net operating loss carryforwards generally expire at dates through 2004. The Company maintains valuation allowances against its
foreign net operating loss carryforwards since, at this time, the realizability of the related deferred tax benefits can not be reasonably assured.
9. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
LEASES - The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment
which expire at various dates through October 2013.
At December 31, 1997 future minimum annual lease payments for related and third-party leases were as follows (in thousands):
YEAR ENDED DECEMBER 31 1997 1996 1995
---------------------- -------- ---------- -------
Current:
Federal $ 23,274 $ 23,140 $ 10,400
State 4,107 3,787 1,895
Foreign 1,041 1,038 2,319
Deferred (5,279) (865) (369)
Change in valuation allowance 143 580 (1,590)
-------- -------- ---------
Total $ 23,286 $ 27,680 $ 12,655
======== ======== =========
YEAR ENDED DECEMBER 31 1997 1996 1995
---------------------- -------- ---------- -------
Federal statutory rate $ 21,734 $ 24,984 $ 16,931
State and local income taxes, net of
Federal tax benefit 2,092 2,456 1,001
Foreign tax (303) (175) 2,778
Foreign source income (72) (573) (2,685)
Increase (reduction) in valuation allowance 143 580 (923)
Net operating loss utilized 165 335 -
Other items, net (473) 73 -
Federal, state and local tax benefit of S Corporation status - - (4,447)
---------- ---------- ----------
$23,286 $27,680 $ 12,655
======== ======== =========
1997 1996
-------- --------
Current:
Deductible assets....................................................$(3,649) $ (2,542)
Non-deductible accruals and reserves.................................. 7,458 4,244
Non-deductible assets................................................. 553 826
Foreign net operating loss carryforwards.............................. 26 1,027
Other................................................................. (329) (289)
------- ---------
Current........................................................... 4,059 3,266
------ --------
Non-Current:
Foreign net operating loss carryforwards.............................. 4,980 1,712
Accelerated depreciation..............................................(1,243) (1,441)
Basis differences from acquisitions................................... 1,843 356
Other assets.......................................................... - (332)
Valuation allowances..................................................(2,458) (1,519)
------- ---------
Non-Current....................................................... 3,122 (1,224)
------ ---------
Total........................................................$ 7,181 $ 2,042
======= ========
YEAR ENDING DECEMBER 31 RELATED PARTY THIRD PARTY TOTAL
----------------------- ------------- ----------- ------
1998................................ $ 1,632 $ 4,163 $ 5,795