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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows (in thousands):
December 31
1994 1993
Deferred tax liabilities:
Depreciation and basis differences
for property, plant and equipment $ 22,332 $ 19,277
Revenue recognition 4,610 4,182
Basis difference on asset and stock sale 3,113 3,037
Prepaid expenses 5,019 3,818
Equity in earnings of TREADCO 1,254 1,064
Total deferred tax liabilities 36,328 31,378
Deferred tax assets:
Accrued expenses 2,743 1,452
Uniform capitalization of inventories 162 154
Postretirement benefits other than pensions 241 111
Other 181 -
Total deferred tax assets 3,327 1,717
Net deferred tax liabilities $ 33,001 $ 29,661
Significant components of the provision for income taxes are as follows:
December 31
1994 1993
Current:
Federal $ 12,595 $ 18,263
State 2,148 3,123
Total current 14,743 21,386
Deferred (credit):
Federal 2,670 (1,786)
State 519 (322)
Total deferred (credit) 3,189 (2,108)
Total income tax expense $ 17,932 $ 19,278
Components of the provision for deferred income taxes for 1992 are as follows : Depreciation, capital leases and gains on asset sales $ (603) Accrued expenses 762 Revenue recognition 522 Prepaid expenses 58 Revenue equipment tires 221 Deferred charges (545) Equity in earnings of TREADCO 788 Other 9 Deferred income tax expense $ 1,212 A reconciliation between the effective income tax rate, as computed on income before extraordinary items and the cumulative effect of an accounting change, and the statutory federal income tax rate is presented in the following table:
Year Ended December 31
1994 1993 1992
($ thousands)
Income tax at the statutory federal rate
of 35% for 1994 and 1993, and 34% for 1992 $ 12,824 $ 14,088 $ 12,121
Federal income tax effects of:
State income taxes (933) (981) (812)
Amortization of nondeductible goodwill 1,031 1,058 1,003
Other nondeductible expenses 969 490 476
Minority interest 1,233 1,099 961
Undistributed earnings of TREADCO 210 189 705
Rate difference for TREADCO (108) (98) -
Retroactive tax rate change effect
on deferred taxes - 677 -
Other 39 (45) 53
Federal income taxes 15,265 16,477 14,507
State income taxes 2,667 2,801 2,387
$ 17,932 $ 19,278 $ 16,894
Effective tax rate 48.9% 47.9% 47.4%
Income taxes paid were $12,368,000 in 1994, $20,740,000 in 1993, and $6,302,000 in 1992. In August 1993, the Revenue Reconciliation Act of 1993 was enacted, which required a retroactive increase in the corporate federal tax rate. This resulted in an increase in the tax expense and a corresponding decrease in net income of $828,000. The increase in the corporate federal tax rate was accounted for in accordance with FAS 109. |
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