CompUSA 2008 Annual Report Download - page 87

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A reconciliation of the difference between the income tax expense and the computed income tax expense based on the
Federal statutory corporate rate is as follows (in thousands):
Year Ended December 31,
2008 2007 2006
Income tax at Federal statutory rate $29,311 $35,008 $24,407
State and local income taxes and changes in valuation
allowances, net of federal tax benefit 3,036 3,332 2,577
Foreign taxes at rates different from the U.S. rate (940) (2,260) 1,199
Changes in valuation allowances for foreign deferred
tax assets (120) (6,184) (2,260)
Tax credits - - (718)
Refunds- prior years (872)
Non-deductible items - 963 -
Adjustment for prior year taxes 253 (593) (760)
Other items, net 232 276
103
$30,900 $30,542 $24,548
The deferred tax assets and liabilities are comprised of the following (in thousands):
December 31,
2008 2007
Assets:
Current:
Accrued expenses and other liabilities $8,524 $8,379
Inventory 1,899 2,374
Valuation allowances - (96)
Total current assets $10,423 $10,657
Non-current:
Net operating loss and credit carryforwards $8,834 $12,462
Accelerated depreciation 1,089 3,494
Intangible and other assets 4,606 6,791
Other 5,300 3,196
Valuation allowances (8,377) (7,291)
Total non-current assets $11,452 $18,652
Liabilities :
Current :
Deductible assets $753 $773
Other 112 524
Total current liabilities $865 $1,297
Non-current:
Accelerated depreciation $248 $-
Other 6 3
Total non-current liabilities $254 $3
The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries
of approximately $39.6 million as of December 31, 2008, since these earnings are considered indefinitely reinvested. The
Company has foreign net operating loss carryforwards which expire through 2022 except for carryforwards in the United
Kingdom which have no expiration. The Company records these benefits as assets to the extent that utilization of such
assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided
valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will
be realized.
In the fourth quarter of 2007 the Company’ s United Kingdom subsidiary emerged from its cumulative loss position and the
previously established valuation allowance against the deferred tax assets of the United Kingdom of approximately $5.9
million was reversed. In the fourth quarter of 2007 the Company recorded a valuation allowance of approximately $1.7
million against the deferred tax assets of its German subsidiary as the result of the German subsidiary entering a cumulative
loss position and uncertainty as to whether or not future earnings will be sufficient to enable utilization of those assets.
As of December 31, 2008, the valuation allowances of approximately $8.4 million related to net operating loss
carryforwards in foreign jurisdictions of $6.4 million, $2.0 million for state net operating loss carryforwards and $0.2
million for other state deductible temporary differences. During 2008, valuation allowances increased $1.4 million as a