Rite Aid 2011 Annual Report Download - page 79

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 26, 2011, February 27, 2010 and February 28, 2009
(In thousands, except per share amounts)
5. Income Taxes (Continued)
The tax effect of temporary differences that gave rise to significant components of deferred tax
assets and liabilities consisted of the following at February 26, 2011 and February 27, 2010:
2011 2010
Deferred tax assets:
Accounts receivable .......................... $ 39,021 $ 21,934
Accrued expenses ............................ 266,523 284,383
Liability for lease exit costs ..................... 175,547 193,073
Pension, retirement and other benefits ............. 188,658 187,240
Long-lived assets ............................ 233,317 148,404
Other .................................... 2,166 3,842
Credits ................................... 71,526 71,070
Net operating losses .......................... 1,578,714 1,411,692
Total gross deferred tax assets ................. 2,555,472 2,321,638
Valuation allowance .......................... (2,199,302) (1,984,468)
Total deferred tax assets ..................... 356,170 337,170
Deferred tax liabilities:
Inventory .................................. 356,170 337,170
Total gross deferred tax liabilities ............... 356,170 337,170
Net deferred tax assets ......................... $ — $ —
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
2011 2010 2009
Unrecognized tax benefits ................... $300,707 $280,394 $233,014
Increases to prior year tax positions .......... 8,872 8,661 5,395
Increases to prior year tax positions for Brooks
Eckerd Acquisition .................... — — 40,670
Decreases to tax positions in prior periods ..... (16,940) (306) (2,532)
Increases to current year tax positions ........ 821 12,669 5,189
Settlements ............................ (2,498) — (811)
Lapse of statute of limitations .............. (4,010) (711) (531)
Unrecognized tax benefits balance ............. $286,952 $300,707 $280,394
The amount of the above unrecognized tax benefits at February 26, 2011, February 27, 2010 and
February 28, 2009 which would impact the Company’s effective tax rate, if recognized, was $109,030,
$116,972 and $100,995, respectively. Additionally, any impact on the effective rate may be mitigated by
the valuation allowance that is maintained against the Company’s net deferred tax assets.
The Company is indemnified by Jean Coutu Group for certain tax liabilities incurred for all years
ended up to and including June 4, 2007. Although the Company is indemnified by Jean Coutu Group,
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