Napa Auto Parts 2005 Annual Report Download - page 36

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6. INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and amounts used for income
tax purposes. Undistributed earnings of the Company’s foreign
subsidiaries are considered to be indefinitely reinvested. As
such, no U.S. federal and state income taxes have been provided
thereon, and it is not practicable to determine the amount of
the related unrecognized deferred income tax liability. Significant
components of the Company’s deferred tax assets and liabilities
are as follows:
The current portion of the deferred tax liability is included in
income taxes payable in the consolidated balance sheets.
The components of income tax expense are as follows:
The 2005 deferred tax expense includes $41,688,000 related to
2005 pension contributions.
The reasons for the difference between total tax expense and
the amount computed by applying the statutory Federal
income tax rate to income before income taxes and the cumu-
lative effect of a change in accounting principle are as follows:
7. EMPLOYEE BENEFIT PLANS
The Company’s defined benefit pension plans cover substantially
all of its employees in the U.S. and Canada. The plan covering
U.S. employees is noncontributory and benefits are based on
the employees’ compensation during the highest five of their
last ten years of credited service. The Canadian plan is contrib-
utory and benefits are based on career average compensation.
The Company’s funding policy is to fund amounts deductible
for income tax purposes.
Notes to Consolidated Financial Statements
(continued)
(in thousands) 2005 2004 2003
Current:
Federal $ 183,387 $ 180,709 $ 155,559
State 32,977 31,599 26,869
Foreign 11,331 8,389 8,319
Deferred 43,935 19,670 27,354
$ 271,630 $ 240,367 $ 218,101
(in thousands) 2005 2004 2003
Statutory rate applied to
income before the
cumulative effect of a change
in accounting principle $ 248,172 $ 222,572 $200,110
Plus state income taxes,
net of Federal tax benefit 25,571 22,370 19,969
Other (2,113) (4,575) (1,978)
$ 271,630 $ 240,367 $218,101
(in thousands) 2005 2004
Deferred tax assets related to:
Expenses not yet deducted for tax purposes $115,890 $ 109,602
Deferred tax liabilities related to:
Employee and retiree benefits 159,890 117,617
Inventory 90,920 80,377
Property and equipment 28,828 28,043
Other 17,973 20,466
297,611 246,503
Net deferred tax liability 181,721 136,901
Current portion of deferred tax liability 24,914 21,218
Non-current deferred tax liability $ 156,807 $ 115,683