Dick's Sporting Goods 2010 Annual Report Download - page 83

The 2010 effective income tax rate reflects the Company’s efforts to simplify the organization of its tax entities. The 2008 effective
income tax rate includes $2.5 million of non-deductible executive separation costs resulting from the departure of certain
executive officers of Golf Galaxy and the impairment of non-deductible goodwill related to the 2007 acquisition of Golf Galaxy.
Components of deferred tax assets (liabilities) consist of the following as of the fiscal periods ended (in thousands):
2010 2009
Store closing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,496 $ 13,642
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,009 29,515
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,841 15,400
Other accrued expenses not currently deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,973 5,701
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,837 23,663
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,338 1,844
Gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,365 9,343
Deferred revenue currently taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,132 4,256
Non income based tax reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,204 3,707
Uncertain income tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,151 3,105
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 586
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,551 110,762
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44,879) (2,066)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,623) (29,784)
Unrealized gains on securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,996) (3,989)
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,935) (8,976)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75,433) (44,815)
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,118 $ 65,947
The deferred tax asset from tax loss carryforwards of $0.2 million represents approximately $3.7 million of state net operating
loss carryforwards, which expire between 2024 and 2029. In 2010, of the $46.1 million net deferred tax asset, $19.0 million is
recorded in other current assets and $27.1 million is recorded in other long-term assets in the Consolidated Balance Sheets. In
2009, of the $65.9 million net deferred tax asset, $66.1 million was recorded in other long-term assets and $0.2 million was
recorded in other short-term liabilities in the Consolidated Balance Sheets.
As of January 29, 2011, the total liability for uncertain tax positions, including related interest and penalties, was approximately
$16.0 million. The following table represents a reconciliation of the Company’s total unrecognized tax benefits balances, excluding
interest and penalties:
2010 2009 2008
Fiscal Year Ended
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,778 $ 7,829 $ 9,715
Increases as a result of tax positions taken in a prior period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 3,667 1,303
Decreases as a result of tax positions taken in a prior period . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (2,627)
Increases as a result of tax positions taken in the current period . . . . . . . . . . . . . . . . . . . . . . . . . . 2,304 2,185 1,188
Decreases as a result of settlements during the current period . . . . . . . . . . . . . . . . . . . . . . . . . . . (667) — (1,545)
Reductions as a result of a lapse of statute of limitations during the current period . . . . . . . . . . . . (1,550) (903) (205)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,560 $12,778 $ 7,829
Included in the balance at January 29, 2011 are $6.9 million of unrecognized tax benefits that would impact our effective tax rate
if recognized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.
As of January 29, 2011, the liability for uncertain tax positions included $2.4 million for the accrual of interest and penalties.
During the years ended January 29, 2011, January 30, 2010 and January 31, 2009, the Company recorded $1.2 million, $0.4 million
Dick’s Sporting Goods, Inc. ¬2010 Annual Report 63
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)