Under Armour 2005 Annual Report Download - page 61

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Under Armour, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements—(Continued)
(amounts in thousands, except per share and share amounts)
10. Provision for Income Taxes
The components of the provision for income taxes consisted of the following:
Year Ended December 31,
2005 2004 2003
Current
Federal ......................................... $12,009 $10,485 $ 3,724
State ........................................... 1,509 630 185
Other foreign countries ............................ 68 — —
13,586 11,115 3,909
Deferred
Federal ......................................... (573) (2,378) (633)
State ........................................... 242 (963) (1,285)
Other foreign countries ............................ — — —
(331) (3,341) (1,918)
Provision for income taxes ......................... $13,255 $ 7,774 $ 1,991
A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as
follows:
Year Ended December 31,
2005 2004 2003
U.S. federal statutory income tax rate ................. 35.0% 35.0% 35.0%
State taxes, net of federal tax impact ................. 3.7 (3.2) (9.0)
Other .......................................... 1.5 0.5 (0.3)
Effective income tax rate .......................... 40.2% 32.3% 25.7%
Historically, the Company has benefited from certain state tax credits which reduced the state portion of our
provision for income taxes in 2005, 2004 and 2003. During 2005, the Company fully earned all existing available
state tax credits and therefore the Company’s 2005 effective state tax rate increased.
Deferred tax assets and liabilities consisted of the following:
December 31,
2005 2004
Deferred tax asset
State tax credits, net of federal tax impact ........................ $1,554 $ 1,981
Tax basis inventory adjustment ................................ 1,818 1,413
Inventory obsolescence reserves ............................... 1,922 1,822
Allowance for doubtful accounts and discounts ................... 1,524 1,782
Other .................................................... 557 944
Total deferred tax assets ................................. 7,375 7,942
Deferred tax liability
Depreciation ............................................... (883) (1,784)
Total deferred tax liabilities ............................... (883) (1,784)
Total deferred tax assets ................................. $6,492 $ 6,158
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