Neiman Marcus 2014 Annual Report Download - page 132

Table of Contents
While there are no undistributed earnings of the Company's foreign operations conducted by MyTheresa as of August 1, 2015, we intend to
permanently reinvest any such earnings outside the U.S. and thus, no provision for federal or state income taxes are or will be provided. If our intentions
change or if these funds are needed for our U.S. operations, we would be required to accrue or pay U.S. taxes on some or all of these undistributed earnings
and our effective tax rate would increase. Determination of the unrecognized deferred tax liability that would be incurred if such amounts were repatriated is
not practicable.
Significant components of our net deferred income tax asset (liability) are as follows:
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Deferred income tax assets:
Accruals and reserves
$ 31,460
$ 32,675
Employee benefits
178,899
162,748
Other
27,197
30,316
Total deferred tax assets
$ 237,556
$ 225,739
Deferred income tax liabilities:
Inventory
$ (10,094)
$ (6,312)
Depreciation and amortization
(253,826)
(272,796)
Intangible assets
(1,374,433)
(1,405,933)
Other
(39,580)
(41,725)
Total deferred tax liabilities
(1,677,933)
(1,726,766)
Net deferred income tax liability
$ (1,440,377)
$ (1,501,027)
Net deferred income tax asset (liability):
Current
$ 30,714
$ 39,049
Non-current
(1,471,091)
(1,540,076)
Total
$ (1,440,377)
$ (1,501,027)
The net deferred tax liability of $1,440.4 million at August 1, 2015 decreased from $1,501.0 million at August 2, 2014. This decrease was
comprised primarily of (i) $31.5 million decrease in deferred tax liabilities related to intangible assets and (ii) $19.0 million decrease in deferred tax
liabilities related to depreciation and amortization. We believe it is more likely than not that we will realize the benefits of our recorded deferred tax assets.
At August 1, 2015, the gross amount of unrecognized tax benefits was $1.9 million, of which $1.2 million would impact our effective tax rate, if
recognized. We classify interest and penalties as a component of income tax expense and our liability for accrued interest and penalties was $4.8 million at
August 1, 2015 and $5.1 million at August 2, 2014. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
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Balance at beginning of fiscal year
$ 2,543
$ 3,461
Gross amount of decreases for prior year tax positions
(875)
(1,072)
Gross amount of increases for current year tax positions
186
154
Balance at ending of fiscal year
$ 1,854
$ 2,543
We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Internal Revenue Service (IRS) is
currently auditing our fiscal year 2012 and short-year 2013 federal income tax returns. With respect to state, local and foreign jurisdictions, with limited
exceptions, we are no longer subject to income tax audits for fiscal years before 2011. We believe our recorded tax liabilities as of August 1, 2015 are
sufficient to cover any potential assessments to be made by the IRS or other taxing authorities upon the completion of their examinations and we will
continue to review our recorded tax liabilities for potential audit assessments based upon subsequent events, new information and future circumstances. We
believe it is reasonably possible that additional adjustments in the amounts of our unrecognized tax benefits
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