American Eagle Outfitters 2009 Annual Report Download - page 67

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Significant components of the provision for income taxes were as follows:
January 30,
2010
January 31,
2009
February 2,
2008
For the Years Ended
(In thousands)
Current:
Federal ....................................... $73,095 $ 69,592 $172,604
Foreign taxes . . ................................ 14,526 16,341 24,030
State......................................... 11,948 7,578 27,987
Total current..................................... 99,569 93,511 224,621
Deferred:
Federal ....................................... (38,810) 21,927 10,306
Foreign taxes . . ................................ 6,513 (340) (2,077)
State......................................... (3,903) 2,882 3,512
Total deferred .................................... (36,200) 24,469 11,741
Provision for income taxes .......................... $63,369 117,980 $236,362
As a result of additional tax deductions related to share-based payments, tax benefits have been recognized as
contributed capital for Fiscal 2009, Fiscal 2008, and Fiscal 2007 in the amounts of $8.0 million, $1.1 million and
$7.3 million, respectively.
During Fiscal 2009 the Company approved and repatriated $91.7 million from its Canadian subsidiaries. The
proceeds from the repatriation were used for general corporate purposes. We plan to indefinitely reinvest accumulated
earnings of our Canadian subsidiaries outside of the United States to the extent not repatriated in Fiscal 2009.
Accordingly, no provision for U.S. income taxes has been provided thereon. Upon distribution of those earnings in the
form of dividends or otherwise, we would be subject to income and withholding taxes offset by foreign tax credits. As
of January 30, 2010, the unremitted earnings of our Canadian subsidiaries were $28.0 million.
As of January 30, 2010, the gross amount of unrecognized tax benefits was $31.6 million, of which
$23.4 million would affect the effective income tax rate if recognized. The gross amount of unrecognized tax
benefits as of January 31, 2009 was $41.1 million, of which $23.1 million would affect the effective income tax rate
if recognized.
The following table summarizes the activity related to our unrecognized tax benefits:
January 30,
2010
January 31,
2009
February 2,
2008
For the Years Ended
(In thousands)
Unrecognized tax benefits, beginning of the year
balance .................................... $41,080 $42,953 $39,311
Increases in tax positions of prior periods ............ 1,679 205 2,562
Decreases in tax positions of prior periods............ (13,471) (1,705) (5,026)
Increases in current period tax positions ............. 14,842 4,221 8,057
Settlements................................... (6,204) (4,529) (1,764)
Lapse of statute of limitations . .................... (6,291) (30) (187)
Translation adjustment .......................... 14 (35) —
Unrecognized tax benefits, end of the year balance ..... $31,649 $41,080 $42,953
66
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)