CompUSA 2013 Annual Report Download - page 65

The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately
$153.4 million as of December 31, 2013, since these earnings are considered indefinitely reinvested. The Company has gross foreign net
operating loss carryforwards of $67.4 million which expire through 2030. The Company records these benefits as assets to the extent that
utilization of such assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided
valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will be realized.
As of December 31, 2013, the Company has approximately $1.2 million in federal tax credit carryforwards expiring in years through 2023
and various amounts of state and foreign net operating loss carryforwards expiring through 2032. The Company has recorded valuation
allowances of approximately $39.7 million, including valuations against the federal and state deductibility of temporary differences and net
operating losses of $20.5 million and $8.7 million respectively, foreign tax credits of $1.2 million and tax effected temporary differences
and net operating loss carryforwards in foreign jurisdictions of $9.3 million.
The Company is routinely audited by federal, state and foreign tax authorities with respect to its income taxes. The Company regularly
reviews and evaluates the likelihood of audit assessments. The Company’
s federal income tax returns have been audited through 2009. The
Company has not signed any consents to extend the statute of limitations for any subsequent years. The Company’
s significant state tax
returns have been audited through 2006. The Company considers its significant tax jurisdictions in foreign locations to be the United
Kingdom, Canada, France, Italy and Germany. The Company remains subject to examination in the United Kingdom for years after 2011, in
Canada for years after 2008, in France for years after 2011, in Italy for years after 2008, in Netherlands for years after 2006 and in Germany
for years after 2007.
In accordance with the guidance for accounting for uncertainty in income taxes the Company recognizes the tax benefits from an uncertain
tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the
technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-
not recognition threshold is
measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent we prevail
in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given
financial statement period could be affected. As of December 31, 2013 the Company had no uncertain tax positions. Interest and penalties, if
any, are recorded in income tax expense. There were no accrued interests or penalty charges related to unrecognized tax benefits recorded in
income tax expense in 2013 or 2012.
Leases -
The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment
which expire at various dates through July 2030. The Company currently leases its headquarters office/warehouse facility in New York from
an entity owned by the Company’
s three principal shareholders and senior executive officers. The Company believes that these payments
were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires certain computer,
communications equipment, and machinery and equipment pursuant to capital lease obligations.
At December 31, 2013, the future minimum annual lease payments for capital leases and related and third-
party operating leases were as
follows (in millions):
61
Table of Contents
11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Capital
Leases
Operating
Leases Total
2014
2.9
$
27.6
$
30.5
2015
2.5
26.8
29.3
2016
1.0
24.2
25.2
2017
0.1
24.7
24.8
2018
20.3
20.3
2019
-
2023
51.1
51.1
2024
-
2028
24.6
24.6
Thereafter
14.8
14.8
Total minimum lease payments
6.5
214.1
220.6
Less: sublease rental income
-
2.9
2.9
Lease obligation net of subleases
6.5
$
211.2
217.7
Less: amount representing interest
1.1
Present value of minimum capital lease payments (including current portion
of $2.5)
$
5.4