Pottery Barn 2013 Annual Report Download - page 62

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Furthermore, it is currently not practical to estimate the tax liability that might be payable if these foreign
earnings were repatriated. Should we decide to repatriate these foreign earnings, we would need to adjust our
income tax provision in the period we determine that the earnings will no longer be indefinitely invested outside
the United States.
A reconciliation of income taxes at the federal statutory corporate rate to the effective rate is as follows:
Fiscal Year Ended
Feb. 2, 2014
(52 Weeks)
Feb. 3, 2013
(53 Weeks)
Jan. 29, 2012
(52 Weeks)
Federal income taxes at the statutory rate 35.0% 35.0% 35.0%
State income tax rate 3.7% 3.3% 3.5%
Other (0.3%) (0.9%) (0.6%)
Effective tax rate 38.4% 37.4% 37.9%
Significant components of our deferred tax accounts are as follows:
Dollars in thousands Feb. 2, 2014 Feb. 3, 2013
Current:
Compensation $ 14,378 $ 9,255
Merchandise inventories 27,337 23,413
Accrued liabilities 26,461 19,462
Customer deposits 58,479 55,321
Prepaid catalog expenses (12,576) (13,971)
Other 7,407 6,284
Total current 121,486 99,764
Non-current:
Depreciation (4,216) (11,142)
Deferred rent 17,500 16,205
Deferred lease incentives (33,065) (29,931)
Stock-based compensation 28,948 23,245
Executive deferral plan 5,699 4,562
Uncertainties 4,378 3,907
Other (5,420) 5,552
Total non-current 13,824 12,398
Total deferred tax assets, net $ 135,310 $ 112,162
The following table summarizes the activity related to our gross unrecognized tax benefits:
Dollars in thousands
Fiscal 2013
(52 Weeks)
Fiscal 2012
(53 Weeks)
Fiscal 2011
(52 Weeks)
Balance at beginning of year $ 8,990 $ 10,023 $ 11,619
Increases related to current year tax positions 3,351 2,188 1,329
Increases related to prior years’ tax positions 328 936 379
Decreases related to prior years’ tax positions (42) (171) (370)
Settlements (170) (1,069) (2,070)
Lapses in statute of limitations (1,692) (2,917) (864)
Balance at end of year $ 10,765 $ 8,990 $ 10,023
As of February 2, 2014, we had $10,765,000 of gross unrecognized tax benefits, of which $7,202,000 would, if
recognized, affect the effective tax rate.
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