Hibbett Sports 2012 Annual Report Download - page 52

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A reconciliation of the statutory federal income tax rate as a percentage of income before provision for income taxes
follows:
January 28, January 29, January 30,
2012 2011 2010
Tax provision computed at the federal statutory rate 35.00% 35.00% 35.00%
Effect of state income taxes, net of federal benefits 2.61 2.48 2.31
Other, net (0.90) (0.66) 0.52
36.71% 36.82% 37.83%
Fiscal Year Ended
In accordance with ASC Topic 740, Income Taxes, deferred income taxes on the consolidated balance sheets result
from temporary differences between the amount of assets and liabilities recognized for financial reporting and income tax
purposes. The components of the deferred income taxes, net, are as follows (in thousands):
Current Non-current Current Non-current
Deferred rent 1,458$ 4,664$ 1,620$ 5,166$
Inventories 3,994 - 3,744 -
Accruals 2,593 1,433 2,421 1,069
Stock-based compensation 989 4,125 867 3,541
Other 20 2 19 6
Total deferred tax assets 9,054 10,224 8,671 9,782
Accumulated depreciation and amortization - (6,682) - (6,048)
Prepaid expenses (805) - (715) -
Accruals (72) - (71) -
Other (375) (126) (357) (138)
Total deferred tax liabilities (1,252) (6,808) (1,143) (6,186)
Deferred income taxes, net 7,802$ 3,416$ 7,528$ 3,596$
January 28, 2012 January 29, 2011
Deferred tax assets represent items that will be used as a tax deduction or credit in future tax returns or are items of
income that have not been recognized for financial statement purposes but were included in the current or prior tax returns for
which we have already properly recorded the tax benefit in the consolidated statements of operations. At least quarterly, we
assess the likelihood that the deferred tax assets balance will be recovered. We take into account such factors as prior earnings
history, expected future earnings, carryback and carryforward periods and tax strategies that could potentially enhance the
likelihood of a realization of a deferred tax asset. To the extent recovery is not more likely than not, a valuation allowance is
established against the deferred tax asset, increasing our income tax expense in the year such determination is made. We have
determined that no such allowance is required.
We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. In accordance with
ASC Subtopic 740-10, we recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more
likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-
likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to
have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated
with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case
law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are
identified. Our effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent
adjustments as considered appropriate by management.
We file income tax returns in the U.S. federal and various state jurisdictions. A number of years may elapse before a
particular matter for which we have recorded a liability related to an unrecognized tax benefit is audited and finally resolved.
Generally, we are not subject to changes in income taxes by the U.S. federal taxing jurisdiction for years prior to Fiscal 2009 or
by most state taxing jurisdictions for years prior to Fiscal 2008. While it is often difficult to predict the final outcome or the
timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is adequate. Favorable
settlement of an unrecognized tax benefit could be recognized as a reduction in our effective tax rate in the period of resolution.
Unfavorable settlement of an unrecognized tax benefit could increase the effective tax rate and may require the use of cash in the
period of resolution. Our liability for unrecognized tax benefits is generally presented as non-current. However, if we anticipate
paying cash within one year to settle an uncertain tax position, the liability is presented as current.