Sonic 2010 Annual Report Download - page 44

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12. Income Taxes
The company’s income before the provision for income taxes is classified by source as domestic income.
The components of the provision for income taxes consist of the following for the years ended August 31:
2010 2009 2008
Current:
Federal $ 12,165 $ 17,512 $ 21,881
State 2,904 2,487 5,730
15,069 19,999 27,611
Deferred:
Federal (5,303) 9,456 7,259
State (797) 1,423 1,092
(6,100) 10,879 8,351
Provision for income taxes $ 8,969 $ 30,878 $ 35,962
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate due to the
following for the years ended August 31:
2010 2009 2008
Amount computed by applying a tax rate of 35% $ 10,562 $ 28,112 $ 33,698
State income taxes (net of federal income tax benefit) 1,370 2,542 4,434
Employment related and other tax credits, net (1,504) (1,401) (1,732)
Benefit from stock option exchange program (1,471) ––
Other 12 1,625 (438)
Provision for income taxes $ 8,969 $ 30,878 $ 35,962
Prior to the adoption of Topic 810, noncontrolling interests were reported as a component of operating income. Due to the
adoption, noncontrolling interests are now presented pre-tax as net income-noncontrolling interests and no longer as a component
of operating income. This presentation gives an appearance of a lower effective tax rate than the company’s actual effective tax
rate. The following table reconciles the difference in the effective tax rate as a result of adoption of this topic:
2010 2009 2008
Effective income tax rate reconciliation (post-adoption of Topic 810):
Effective tax rate per consolidated income statement 25.8% 32.3% 30.4%
Book income attributable to noncontrolling interests 3.9 6.1 7.0
Effective tax rate for the fiscal year 29.7% 38.4% 37.4%
Notes to Consolidated Financial Statements
August 31, 2010, 2009 and 2008 (In thousands, except per share data)
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