Ulta 2014 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2014 Ulta annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:
Fiscal
2014
Fiscal
2013
Fiscal
2012
Federal statutory rate ............................................. 35.0% 35.0% 35.0%
State effective rate, net of federal tax benefit .......................... 2.8% 3.0% 3.4%
Other ......................................................... (0.3%) 0.1% (0.1%)
Effective tax rate ................................................ 37.5% 38.1% 38.3%
Significant components of the Company’s deferred tax assets and liabilities are as follows:
(In thousands)
January 31,
2015
February 1,
2014
Deferred tax assets:
Reserves not currently deductible ................................ $22,380 $ 24,721
Employee benefits ............................................ 8,782 6,290
Credit carryforwards .......................................... 338 402
Accrued liabilities ............................................ 8,231 3,927
Inventory valuation ........................................... 617 1,708
Total deferred tax assets ......................................... 40,348 37,048
Deferred tax liabilities:
Property and equipment ....................................... 44,882 44,288
Deferred rent obligation ....................................... 38,409 28,529
Prepaid expenses ............................................. 10,775 8,703
Total deferred tax liabilities ...................................... 94,066 81,520
Net deferred tax liability ......................................... $(53,718) $(44,472)
At January 31, 2015, the Company had $338 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 $1,414 and $795 at January 31, 2015 and February 1, 2014, respectively.
The balance is the Company’s best estimate of the potential liability for uncertain tax positions. A reconciliation
of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:
(In thousands)
January 31,
2015
February 1,
2014
Balance at beginning of the period ................................. $ 795 $ —
Increase due to a current year position .............................. 670 795
Decrease due to a prior period position ............................. (51) —
Balance at the end of the period ................................... $1,414 $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 2014 and 2013.
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 years before 2011 and this applies to
examinations by the State authorities before 2010.
61