Saks Fifth Avenue 2011 Annual Report Download - page 62

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SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The income tax expense (benefit) from continuing operations varies from the amounts computed by applying
the statutory federal income tax rate to income before taxes. The reasons for these differences are as follows:
2011 2010 2009
Expected federal income taxes at statutory rate of 35% ........ $ 35,660 $ 11,720 $ (35,757)
State and local income taxes, net of federal benefit ........... 7,316 4,656 (4,267)
State NOL valuation allowance adjustment .................. (11,782) (2,228) 3,045
Effect of tax reserve adjustments .......................... (4,508) (28,360) (5,226)
State tax rate adjustment ................................ — — (2,703)
Other, net ............................................ 408 302 407
Income tax expense (benefit) from continuing operations . . . $ 27,094 $ (13,910) $ (44,501)
The components of the net deferred tax asset recognized on the Consolidated Balance Sheets are as follows:
January 28,
2012
January 29,
2011
Current:
Deferred tax assets:
Accrued expenses ........................................... $ 45,837 $ 40,713
Inventory .................................................. 4,049 —
NOL carryforwards .......................................... 38,561 55,930
Valuation allowance ......................................... (2,975) (6,305)
Deferred tax liabilities:
Inventory .................................................. — (4,222)
Net deferred tax assets, current .............................. 85,472 86,116
Non-current:
Deferred tax assets:
Capital leases .............................................. 20,799 21,409
Rent adjustments ........................................... 16,618 21,098
Pension ................................................... 11,820 15,439
Other long-term liabilities ..................................... 21,690 26,800
AMT Credit ................................................ 23,944 22,671
NOL carryforwards .......................................... 49,009 60,476
Valuation allowance ......................................... (16,242) (23,776)
Deferred tax liabilities:
Property and equipment ..................................... 12,813 19,283
Other assets ............................................... 4 8
Net deferred tax assets, non-current .......................... 140,455 163,408
Net deferred tax assets .......................................... $ 225,927 $ 249,524
The federal and state net operating loss (“NOL”) carryforwards will expire between 2012 and 2030. The majority
of the NOL carryforward is a result of the net operating losses incurred during the fiscal years ended January 30,
2010 and January 31, 2009 due principally to difficult market and macroeconomic conditions. The Company has
concluded, based on the weight of all available positive and negative evidence that all but $19,217 of these tax
benefits relating to certain state losses are more likely than not to be realized in the future. Therefore, a
valuation allowance for the $19,217 has been established.
F-17