| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Note 6: Taxes on Income
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this “liability” method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities by applying enacted statutory tax rates applicable to future years in which the differences are expected to reverse.
The Company’s federal income tax returns through fiscal year 1996 have been examined by the Internal Revenue Service; tax returns for years prior to 1994 have been examined and closed. The Company has reached an agreement with respect to all adjustments proposed by the Internal Revenue Service in connection with its examination of the Company’s returns for fiscal years 1994-96 and awaits a final determination. Various state tax returns are currently under examination by state tax authorities. The results of these examinations are not expected to be material to the Company’s results of operations, financial position or cash flows.
Significant components of income taxes from continuing operations are as follows:
|
(In thousands) |
1999 |
1998 |
1997 |
||||||||||||
|
|
|||||||||||||||
|
Current: |
|||||||||||||||
|
Federal |
$ |
41,897 |
$ |
27,488 |
$ |
21,093 |
|||||||||
|
State |
5,931 |
6,209 |
3,962 |
||||||||||||
|
|
|
|
|||||||||||||
|
47,828 |
33,697 |
25,055 |
|||||||||||||
|
|
|
|
|||||||||||||
|
Deferred: |
|||||||||||||||
|
Federal |
(2,150 |
) |
(2,836 |
) |
(1,450 |
) |
|||||||||
|
State |
(215 |
) |
(379 |
) |
(235 |
) |
|||||||||
|
|
|
|
|||||||||||||
|
(2,365 |
) |
(3,215 |
) |
(1,685 |
) |
||||||||||
|
|
|
|
|||||||||||||
|
$ |
45,463 |
$ |
30,482 |
$ |
23,370 |
||||||||||
|
|
|||||||||||||||
Temporary differences which give rise to significant components of the Company’s deferred tax liabilities and assets at December 26, 1999, and December 27, 1998, are as follows:
|
(In thousands) |
1999 |
1998 |
||||||||||||
|
|
||||||||||||||
|
Deferred tax liabilities: |
||||||||||||||
|
Difference between book and tax bases of intangible assets |
$ |
155,770 |
$ |
155,386 |
||||||||||
|
Tax over book depreciation |
88,508 |
|
117,505 |
|||||||||||
|
Other |
17,414 |
17,743 |
||||||||||||
|
|
|
|||||||||||||
|
Total deferred tax liabilities |
261,692 |
290,634 |
||||||||||||
|
|
|
|||||||||||||
|
Deferred tax assets: |
||||||||||||||
|
Employee benefits |
(36,918 |
) |
(39,469 |
) |
||||||||||
|
Other |
(15,542 |
) |
(17,377 |
) |
||||||||||
|
|
|
|||||||||||||
|
Total deferred tax assets |
(52,460 |
) |
(56,846 |
) |
||||||||||
|
|
|
|||||||||||||
|
Deferred tax liabilities, net |
209,232 |
233,788 |
||||||||||||
|
Deferred tax assets included in other current assets |
8,205 |
11,180 |
||||||||||||
|
|
|
|||||||||||||
|
Deferred tax liabilities |
$ |
217,437 |
$ |
244,968 |
||||||||||
|
|
||||||||||||||
Reconciliation of income taxes computed at the federal statutory tax rate to actual income tax expense from continuing operations is as follows:
|
(In thousands) |
1999 |
1998 |
1997 |
||||||||||||
|
|
|||||||||||||||
|
Income taxes computed at federal statutory tax rate |
$ |
40,393 |
$ |
29,371 |
$ |
20,635 |
|||||||||
|
Increase (reduction) in income taxes resulting from: |
|||||||||||||||
|
State income taxes, net of federal income tax benefit |
3,714 |
3,747 |
2,327 |
||||||||||||
|
Investment income — unconsolidated affiliates |
(397 |
) |
(2,622 |
) |
(3,557 |
) |
|||||||||
|
Amortization of excess cost (goodwill) |
2,815 |
2,960 |
2,873 |
||||||||||||
|
Life insurance plans |
(1,139 |
) |
(1,905 |
) |
(1,625 |
) |
|||||||||
|
Other |
77 |
(1,069 |
) |
2,717 |
|||||||||||
|
|
|
|
|||||||||||||
|
$ |
45,463 |
$ |
30,482 |
$ |
23,370 |
||||||||||
|
|
|||||||||||||||
Net of refunds, in 1999, 1998 and 1997, the Company paid income taxes of $52.1 million, $56.5 million and $29.4 million, respectively.
