Baskin Robbins 2013 Annual Report Download - page 98

-88-
The components of deferred tax assets and liabilities were as follows (in thousands):
December 28, 2013 December 29, 2012
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
Current:
Allowance for doubtful accounts $ 1,055 — 969 —
Deferred gift cards and certificates 20,371 — 22,561 —
Rent 5,307 — 4,990 —
Deferred income 4,672 — 3,926 —
Other current liabilities 13,983 — 11,422 —
Other 1,073 — 3,395 —
Total current 46,461 — 47,263 —
Noncurrent:
Capital leases 2,830 — 2,924 —
Rent 2,243 — 2,032 —
Property and equipment — 6,315 — 10,229
Deferred compensation liabilities 7,747 — 6,478 —
Deferred income 4,234 — 4,905 —
Real estate reserves 1,287 — 1,398 —
Franchise rights and other intangibles — 576,567 — 584,642
Unused foreign tax credits 6,756 — 8,034 —
Other 1,103 4,322 — 26
26,200 587,204 25,771 594,897
Valuation allowance (710)———
Total noncurrent 25,490 587,204 25,771 594,897
$ 71,951 587,204 73,034 594,897
At December 28, 2013, the valuation allowance for deferred tax assets was $0.7 million. This valuation allowance related to
deferred tax assets for net operating loss carryforwards attributable to our wholly-owned subsidiary in Spain. At December 28,
2013, the Company had $6.8 million of unused foreign tax credits, which expire in fiscal years 2020 and 2021.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in
making this assessment. Based upon the level of historical taxable income, and projections for future taxable income over the
periods for which the deferred tax assets are deductible, management believes, as of December 28, 2013, with the exception of
net operating loss carryforwards attributable to our Spain subsidiary, it is more likely than not that the Company will realize the
benefits of the deferred tax assets.
The Company has not recognized a deferred tax liability of $7.1 million for the undistributed earnings of foreign operations, net
of foreign tax credits, relating to our foreign joint ventures that arose in fiscal year 2013 and prior years because the Company
currently does not expect those unremitted earnings to reverse and become taxable to the Company in the foreseeable future. A
deferred tax liability will be recognized when the Company is no longer able to demonstrate that it plans to permanently
reinvest undistributed earnings. As of December 28, 2013 and December 29, 2012, the undistributed earnings of these joint
ventures were approximately $129.7 million and $123.3 million, respectively.
The Company has not recognized a deferred tax liability of $3.1 million for the undistributed earnings of our foreign
subsidiaries since such earnings are considered indefinitely reinvested outside the United States. As of December 28, 2013, the
amount of cash associated with indefinitely reinvested foreign earnings was approximately $7.5 million. If in the future we
decide to repatriate such foreign earnings, we would incur incremental U.S. federal and state income tax. However, our intent is
to keep these funds indefinitely reinvested outside of the United States and our current plans do not demonstrate a need to
repatriate them to fund our U.S. operations.