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## Note E—Income Taxes 

## Notes to Consolidated Financial Statements 

(continued) 

At August 30, 2003, the Company had net operating loss carryforwards (NOLs) for federal income tax purposes of approximately $27.5 million that expire in years 2007 through 2017. These carryforwards resulted from the Company’s acquisition of ADAP, Inc. (which had been doing business as “Auto Palace”) in fiscal 1998. The use of the federal tax NOLs is subject to annual limitations. A valuation allowance of $8.6 million in fiscal 2003 and $8.7 million in fiscal 2002 relates to these carryforwards. In addition, some of the Company’s subsidiaries have state income tax NOLs that expire in years 2004 through 2022. These state NOLs resulted from the Company’s acquisition of Chief Auto Parts Inc. and ADAP, Inc. The use of the NOLs is limited to future taxable earnings of these subsidiaries and may be subject to annual limitations. Valuation allowances of $5.7 million in fiscal 2003 and fiscal 2002 relate to these carryforwards. 

The provision for income tax expense for each of the last three fiscal years consisted of the following: 

<img src='content_image/93458.jpg'>

The following table presents a reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate of 35% to income before income taxes. 

<img src='content_image/93457.jpg'>

Significant components of the Company’s deferred tax assets and liabilities were as follows: 

<img src='content_image/93455.jpg'>

