Banana Republic 2014 Annual Report Download - page 74

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Deferred tax assets (liabilities) consist of the following:
($ in millions) January 31,
2015 February 1, 2014
Gross deferred tax assets:
Deferred rent $ 162 $ 147
Accrued payroll and related benefits 107 127
Nondeductible accruals 113 104
Inventory capitalization and other adjustments 63 62
Deferred income 69 28
Federal, State, and foreign net operating losses 48 45
Other 70 70
Total gross deferred tax assets 632 583
Valuation allowance (94) (85)
Total deferred tax assets, net of valuation allowance 538 498
Deferred tax liabilities:
Depreciation and amortization (173) (71)
Unremitted earnings of certain foreign subsidiaries (56) (38)
Unrealized net gain on cash flow hedges (45) (17)
Other (3) (16)
Total deferred tax liabilities (277) (142)
Net deferred tax assets $ 261 $ 356
Current portion (included in other current assets) $ 142 $ 179
Non-current portion (included in other long-term assets) 119 177
Total $ 261 $ 356
As of January 31, 2015, we had approximately $2 million federal, $71 million state, and $171 million foreign loss
carryovers in multiple taxing jurisdictions that could be utilized to reduce the tax liabilities of future years. The tax-
effected loss carryovers were approximately $1 million for federal, $4 million for state, and $43 million for foreign
as of January 31, 2015. We provided a valuation allowance of approximately $2 million and $35 million against
the deferred tax assets related to the state and foreign loss carryovers, respectively. We also provided a valuation
allowance of approximately $57 million related to other federal, state, and foreign deferred tax assets. The federal
losses expire in fiscal 2033, the state losses expire between fiscal 2019 and fiscal 2033, approximately $77
million of the foreign losses expire between fiscal 2015 and fiscal 2034, and $94 million of the foreign losses do
not expire.
In fiscal 2014, we assessed the forecasted cash needs and overall financial position of our foreign subsidiaries.
As a result, we determined that approximately $155 million of current year earnings was in excess of the amount
we expect to utilize in certain foreign operations for an indefinite period of time and we have recorded related tax
expense of $28 million in fiscal 2014.
U.S. income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of
investments in certain foreign subsidiaries that is indefinitely reinvested outside the United States, as we intend to
utilize the undistributed foreign earnings of these subsidiaries in our operations outside the United States for an
indefinite period of time, primarily to support our international growth. This amount becomes taxable upon a
repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such temporary
differences totaled approximately $581 million as of January 31, 2015. The amount of any unrecognized deferred
income tax liability on this temporary difference is estimated to be approximately $72 million.