O'Reilly Auto Parts 2007 Annual Report Download - page 44

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42
The provision for income taxes consists of the following:
(In thousands) Current Deferred Total
2007:
Federal $ 110,302 $ (5,847) $ 104,455
State 9,539 (494) 9,045
$ 119,841 $ (6,341) $ 113,500
2006:
Federal $ 96,824 $ (938) $ 95,886
State 8,373 (79) 8,294
$ 105,197 $ (1,017) $ 104,180
2005:
Federal $ 79,720 $ (616) $ 79,104
State 7,754 (55) 7,699
$ 87,474 $ (671) $ 86,803
A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows:
(In thousands) 2007 2006 2005
Federal income taxes at statutory rate $ 107,620 $ 98,793 $ 87,874
State income taxes, net of federal tax benefit 5,880 5,387 4,986
Other items, net -- -- (6,057)
$ 113,500 $ 104,180 $ 86,803
The Company's provision for income taxes for 2005 included a non-cash tax adjustment of $6.1 million in the third quarter of 2005 resulting
from the favorable resolution of prior tax uncertainties. The tax benefit realized in 2005 was nonrecurring and reflected the reversal of previously
recorded income tax reserves related to a prior acquisition. In determining the provision for income taxes, the Company uses an estimated annual
effective tax rate based on expected annual income by jurisdiction and statutory tax rates. The impact of significant discrete items, including the
tax benefit realized in the third quarter of 2005, is separately recognized in the quarter in which they occur.
The tax benefit associated with the exercise of non-qualified stock options has been reflected as additional paid-in capital in the accompanying
consolidated financial statements.
Notes to Consolidated Financial Statements (continued)