Sally Beauty Supply 2006 Annual Report Download - page 80
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Table of Contents
Sally Holdings, Inc. and Subsidiaries
(A Wholly-Owned Subsidiary of Alberto-Culver Company)
Notes to Consolidated Financial Statements
14. Income Taxes
The provision for income taxes for the fiscal years ended September 30, 2006, 2005 and 2004 consists of the following (in
thousands):
2006 2005 2004
Current:
Federal $ 57,025 $ 57,244 $ 57,435
Foreign 3,141 1,288 3,690
State 9,197 6,334 3,276
Total current portion 69,363 64,866 64,401
Deferred:
Federal 1,053 7,319 (2,778 )
Foreign (255 ) 1,246 (271 )
State (245 ) (277 ) 707
Total deferred portion 553 8,288 (2,342 )
Total provision for income tax $ 69,916 $ 73,154 $ 62,059
The difference between the U.S. statutory federal income tax rate and the effective income tax rate is summarized below:
2006 2005 2004
Statutory tax rate 35.0 % 35.0 % 35.0 %
State income taxes, net of federal tax benefit 3.2 2.1 1.5
Effect of foreign operations (0.1 ) 1.5 0.5
Other, net 0.7
—
0.1
Effective tax rate 38.8 % 38.6 % 37.1 %
The tax effects of temporary differences that give rise to The Company’ s deferred tax assets and liabilities at September 30, 2006 and
2005 are as follows (in thousands):
2006 2005
Deferred tax assets attributable to:
Stock option expense and non-cash charge related to Alberto-Culver’ s conversion
to one class of common stock $ 4,918 $ 5,007
Accrued expenses 7,770 6,775
Inventory adjustments 2,557 897
Foreign loss carryforwards 7,303 5,259
Long-term liabilities 1,621 1,074
Total deferred tax assets 24,169 19,012
Valuation allowance (6,977 ) (5,072 )
Total deferred tax assets, net 17,192 13,940
Deferred tax liabilities attributable to:
Depreciation and amortization 28,194 21,877
Other income taxes 261 506
Total deferred tax liabilities 28,455 22,383
Net deferred tax liability $ 11,263 $ 8,443
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