Pottery Barn 2009 Annual Report Download - page 64
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Except where required by U.S. tax law, we have historically elected not to provide for U.S. income taxes with
respect to the undistributed earnings of our foreign subsidiaries as we have intended to utilize those earnings in
our foreign operations for an indefinite period of time. In the fourth quarter of fiscal 2008, based on the current
economic environment, we assessed our anticipated future cash needs and the overall financial position of our
Canadian subsidiary and concluded that the remaining undistributed earnings were in excess of our future cash
requirements for the ongoing operations of our Canadian subsidiary. Accordingly, our Canadian subsidiary
repatriated $13,900,000 to our U.S. operations in the fourth quarter of fiscal 2008. These repatriated earnings
were offset by foreign tax credits that reduced the financial tax liability associated with this foreign dividend to
zero. As of January 31, 2010, the accumulated undistributed earnings of all of our foreign subsidiaries were
approximately $4,968,000 and are sufficient to support our anticipated future cash needs for our foreign
operations. We currently intend to utilize the remainder of these undistributed earnings for an indefinite period of
time and will only repatriate such earnings when it is tax effective to do so. It is currently not practical to
estimate the tax liability that might be payable if these foreign earnings were to be repatriated.
A reconciliation of income taxes at the federal statutory corporate rate to the effective rate is as follows:
Fiscal Year Ended
Jan. 31, 2010
(52 Weeks)
Feb. 1, 2009
(52 Weeks)
Feb. 3, 2008
(53 Weeks)
Federal income taxes at the statutory rate 35.0% 35.0% 35.0%
State income tax rate 2.4% (8.2%)13.5%
Other (1.8%) 1.6% (0.4%)
Total 35.6% 28.4% 38.1%
1The decrease in the fiscal 2008 state income tax rate was primarily driven by certain favorable income tax resolutions during fiscal 2008,
representing (14.7%).
Significant components of our deferred tax accounts are as follows:
Dollars in thousands
Jan. 31, 2010
(52 Weeks)
Feb. 1, 2009
(52 Weeks)
Current:
Compensation $ 8,659 $ 12,436
Merchandise inventories 21,715 19,538
Accrued liabilities 17,451 11,868
Customer deposits 53,229 58,197
Prepaid catalog expenses (13,014) (14,589)
Other 4,155 2,899
Total current 92,195 90,349
Non-current:
Depreciation 37,586 13,392
Deferred rent 16,007 15,672
Deferred lease incentives (36,556) (27,548)
Stock-based compensation 23,956 20,828
Executive deferral plan 5,307 4,527
Uncertainties 7,252 8,260
Other 257 1,424
Total non-current 53,809 36,555
Total deferred tax assets, net $146,004 $126,904
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