Ulta 2013 Annual Report Download - page 63

Significant components of the Company’s deferred tax assets and liabilities are as follows:
(In thousands)
February 1,
2014
February 2,
2013
Deferred tax assets:
Reserves not currently deductible ................................ $24,721 $ 18,160
Employee benefits ............................................ 6,290 5,029
Net operating loss & credit carryforwards ......................... 402 208
Accrued liabilities ............................................ 3,927 3,854
Inventory valuation ........................................... 1,708 1,280
Total deferred tax assets ......................................... 37,048 28,531
Deferred tax liabilities:
Property and equipment ....................................... 44,288 39,357
Deferred rent obligation ....................................... 28,529 21,638
Prepaid expenses ............................................. 8,703 8,140
Total deferred tax liabilities ...................................... 81,520 69,135
Net deferred tax liability ......................................... $(44,472) $(40,604)
At February 1, 2014, the Company had $402 credit carryforwards for state income tax purposes.
The Company accounts for uncertainty in income taxes in accordance with the ASC rules for income taxes. The
reserve for uncertain tax positions was $795 at February 1, 2014. The balance is the Company’s best estimate of
the potential liability for uncertain tax positions. The increase in the liability for income taxes associated with
uncertain tax positions relates to a current year position. There was no reserve for uncertain tax positions at
February 2, 2013. A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties,
is as follows:
(In thousands)
February 1,
2014
February 2,
2013
Balance at beginning of the period ................................. $ — $ —
Increase due to a current year position .............................. 795 —
Decrease due to a prior period position ............................. — —
Balance at the end of the period ................................... $795 $ —
The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve
months. However, it does not expect the change to have a significant impact on its consolidated financial
statements. Income tax-related interest and penalties were insignificant for fiscal 2013, 2012 and 2011.
The Company files tax returns in the U.S. Federal and State jurisdictions. The Company is no longer subject to
U.S. Federal examinations by the Internal Revenue Services for the years before 2011 and, this applies to
examinations by the State authorities before 2009.
7. Notes payable
On October 19, 2011, the Company entered into an Amended and Restated Loan and Security Agreement (the
Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a
Lender thereunder, Wells Fargo Capital Finance LLC as a Lender, J.P. Morgan Securities LLC as a Lender,
JP Morgan Chase Bank, N.A. as a Lender and PNC Bank, National Association, as a Lender. The Loan
Agreement amended and restated the Loan and Security Agreement, dated as of August 31, 2010, by and among
the lenders. The Loan Agreement extends the maturity of the Company’s credit facility to October 2016,
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