Harris Teeter 2008 Annual Report Download - page 52

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48
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The tax effects of temporary differences giving rise to the Company’s consolidated deferred tax assets and
liabilities at September 28, 2008 and September 30, 2007 are as follows (in thousands):
2008 2007
Deferred Tax Assets:
Employee benefits .................................................. $ 27,466 $ 34,032
Rent obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,997 19,752
Reserves not currently deductible ...................................... 16,075 14,405
Vendor allowances .................................................. 7,656 6,610
Other............................................................. 3,978 2,793
Total deferred tax assets ................................................ $ 76,172 $ 77,592
Deferred Tax Liabilities:
Property, plant and equipment ......................................... $(60,296) $(52,388)
Inventories ........................................................ (14,205) (8,518)
Undistributed earnings on foreign subsidiaries ............................ (3,695) (3,470)
Other............................................................. (2,362) (4,311)
Total deferred tax liabilities.............................................. $(80,558) $(68,687)
As of September 28, 2008, the Company had approximately $7,961,000 of state cumulative net operating
loss carryforwards, $3,940,000 of foreign cumulative net operating loss carryforwards and $1,608,000 of foreign
tax credit carryforwards. The state net operating losses will begin to expire in fiscal 2022, the foreign net
operating losses begin to expire in fiscal 2009 and the foreign tax credits begin to expire in fiscal 2010. A
valuation allowance of $2,553,000 and $1,436,000 is included with deferred income taxes as of September 28,
2008 and September 30, 2007, respectively. The valuation allowance increased by $1,117,000 from fiscal 2007 to
fiscal 2008 and increased $697,000 from fiscal 2006 to fiscal 2007. The allowance was developed based upon the
uncertainty of the realization of certain state and foreign deferred tax assets related to net operating losses and
other foreign tax items. Although realization is not assured for the remaining deferred tax assets, it is considered
more likely than not the deferred tax assets will be realized through future taxable earnings.
Undistributed earnings of the Company’s foreign operations amount to approximately $20.8 million at
September 28, 2008. Of those earnings, approximately $11.4 million are considered to be indefinitely reinvested
and accordingly, no provision for U.S. federal and state income taxes is required to be provided thereon. If those
earnings were distributed, the Company would be subject to U.S. federal taxes and withholding taxes payable to
the various foreign countries of approximately $4.4 million (less any applicable U.S. foreign tax credits).