Pottery Barn 2012 Annual Report Download - page 63

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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 intended to utilize those earnings in our
foreign operations for an indefinite period of time. As of February 3, 2013, the accumulated undistributed
earnings of all foreign subsidiaries were approximately $35,600,000 and are sufficient to support our anticipated
future cash needs for our foreign operations. We currently intend to utilize the remainder of those 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
Feb. 3, 2013
(53 Weeks)
Jan. 29, 2012
(52 Weeks)
Jan. 30, 2011
(52 Weeks)
Federal income taxes at the statutory rate 35.0% 35.0% 35.0%
State income tax rate 3.3% 3.5% 3.8%
Other (0.9%) (0.6%) (0.8%)
Effective tax rate 37.4% 37.9% 38.0%
Significant components of our deferred tax accounts are as follows:
Dollars in thousands Feb. 3, 2013 Jan. 29, 2012
Current:
Compensation $ 9,255 $ 8,638
Merchandise inventories 23,413 21,923
Accrued liabilities 19,462 15,438
Customer deposits 55,321 53,638
Prepaid catalog expenses (13,971) (12,869)
Other 6,284 4,976
Total current 99,764 91,744
Non-current:
Depreciation (11,142) (9,008)
Deferred rent 16,205 15,824
Deferred lease incentives (29,931) (28,353)
Stock-based compensation 23,245 20,211
Executive deferral plan 4,562 4,563
Uncertainties 3,907 4,856
Other 5,552 4,289
Total non-current 12,398 12,382
Total deferred tax assets, net $ 112,162 $ 104,126
The following table summarizes the activity related to our gross unrecognized tax benefits:
Dollars in thousands Feb. 3, 2013 Jan. 29, 2012 Jan. 30, 2011
Balance at beginning of year $ 10,023 $ 11,619 $ 15,866
Increases related to current year tax positions 2,188 1,329 821
Increases related to prior years’ tax positions 936 379 0
Decreases related to prior years’ tax positions (171) (370) (560)
Settlements (1,069) (2,070) (1,701)
Lapses in statute of limitations (2,917) (864) (2,807)
Balance at end of year $ 8,990 $ 10,023 $ 11,619
49
Form 10-K