Jack In The Box 2008 Annual Report Download - page 65

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred
tax liabilities at each year-end are presented below (in thousands):
2008 2007
Deferred tax assets:
Accrued pension and post retirement benefits ...................... $23,510 $ 34,721
Accrued insurance .......................................... 13,952 17,806
Leasing transactions ......................................... 14,057 14,476
Accrued vacation pay expense ................................. 11,926 12,322
Deferred income ........................................... 2,883 3,535
Other reserves and allowances ................................. 9,633 9,313
Tax loss and tax credit carryforwards ............................ 4,257 3,195
Share-based compensation . ................................... 11,398 8,584
Other, net................................................. 4,244 3,085
Total gross deferred tax assets ................................. 95,860 107,037
Valuation allowance ........................................... (4,257) (3,158)
Total net deferred tax assets . . ................................... 91,603 103,879
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation .... (71,159) (74,154)
Intangible assets............................................ (22,388) (21,624)
Total gross deferred tax liabilities ............................... (93,547) (95,778)
Net deferred tax assets (liabilities) .............................. $ (1,944) $ 8,101
Deferred tax assets at September 28, 2008 include state net operating loss carryforwards of approximately
$66.0 million expiring at various times between 2010 and 2027.At September 28, 2008 and September 30, 2007, we
recorded a valuation allowance related to state net operating losses of $4.3 million and $3.2 million, respectively.
The current year change in the valuation allowance of $1.1 million related to state net operating losses. We believe
that it is more likely than not that these loss carryforwards will not be realized and that the remaining deferred tax
assets will be realized through future taxable income or alternative tax strategies.
As of October 1, 2007, the date of our adoption of FIN 48, our gross unrecognized tax benefits for income taxes
associated with uncertain tax positions totaled $11.0 million. At September 28, 2008, we had $4.2 million of
unrecognized tax benefits. Of this total, $4.0 million represented the amount of unrecognized tax benefits that, if
recognized, would favorably affect the effective income tax rate in future periods. A reconciliation of the beginning
and ending amount of unrecognized tax benefits follows (in thousands):
Balance upon adoption of FIN 48 ........................................... $11,024
Reductions to tax positions recorded during prior years ........................... (689)
Reductions to tax positions due to settlements with taxing authorities ................ (3,625)
Reductions to tax positions due to statute expiration ............................. (2,538)
Balance at September 28, 2008............................................. $ 4,172
As of the date of adoption, we recognize interest and, when applicable, penalties related to uncertain tax
positions in income tax expense.
F-19
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)