7. Income Taxes
The income tax provision consisted of the following for the respective years:
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| Fiscal Year | |||
| In millions | 2000 | 1999 | 1998 |
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| Current: Federal | $ 397.2 | $ 289.6 | $ 197.3 |
| State | 73.9 | 68.4 | 41.4 |
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| 471.1 | 358.0 | 238.7 | |
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| Deferred: Federal | 21.9 | 72.6 | 44.1 |
| State | 4.4 | 10.7 | 23.7 |
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| 26.3 | 83.3 | 67.8 | |
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| Total | $ 497.4 | $ 441.3 | $ 306.5 |
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Following is a reconciliation of the statutory income tax rate to the Company's effective tax rate for the respective years:
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| Fiscal Year | |||
| 2000 | 1999 | 1998 | |
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| Statutory income tax rate | 35.0% | 35.0% | 35.0% |
| State income taxes, net of federal tax benefit | 4.1 | 4.8 | 5.8 |
| Goodwill and other | 0.9 | 1.2 | 1.2 |
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| Effective tax rate before merger-related costs | 40.0 | 41.0 | 42.0 |
| Merger-related costs(1) | — | — | 2.4 |
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| Effective tax rate | 40.0% | 41.0% | 44.4% |
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(1) Includes state tax effect.
Following is a summary of the significant components of the Company's deferred tax assets and liabilities as of the respective balance sheet dates:
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| In millions | December 30, 2000 |
January 1, 2000 |
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| Deferred tax assets: Employee benefits |
$ 65.1 | $ 56.7 |
| Other | 137.4 | 135.1 |
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| Total deferred tax assets | 202.5 | 191.8 |
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| Deferred tax liabilities: Accelerated depreciation |
(98.6) | (68.9) |
| Inventory | (7.0) | (10.7) |
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| Total deferred tax liabilities | (105.6) | (79.6) |
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| Net deferred tax assets | $ 96.9 | $ 112.2 |
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Income taxes paid were $342.5 million, $354.5 million and $102.6 million for 2000, 1999 and 1998, respectively.
Based on historical pre-tax earnings, the Company believes it is more likely than not that the deferred tax assets will be realized.
