Express 2011 Annual Report Download - page 79

Net deferred tax assets are classified within the Consolidated Balance Sheets and are included in other current
assets for current deferred tax assets and separately identified as deferred taxes for non-current deferred tax
assets. Net deferred tax liabilities are classified within the Consolidated Balance Sheets and are included in
accrued expenses for current deferred tax liabilities and other long-term liabilities for non-current deferred tax
liabilities. The following table summarizes net deferred tax assets from the balance sheet:
January 28, 2012 January 29, 2011
(in thousands)
Current deferred taxes ................... $ 7,486 $14,115
Non-current deferred taxes ................ 12,462 5,513
Net deferred tax asset ................ $19,948 $19,628
The Company has weighed all available evidence, both positive and negative, to determine whether a valuation
allowance was needed and has recorded a valuation allowance against certain deferred tax assets arising from
foreign subsidiaries. As of January 28, 2012 and January 29, 2011, the valuation allowance for net operating
losses totaled $0.1 million. In addition, as of January 28, 2012, the valuation allowance for other noncurrent tax
assets totaled $0.2 million. The Company has a net operating loss carryover related to operations in Canada that
will expire in 2032. The amount of the deferred tax assets considered realizable could be adjusted if estimates of
future taxable income during the carryforward period are reduced or increased, or if objective negative evidence
in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence,
such as the Company’s projections for growth.
No other valuation allowances have been provided for deferred tax assets because management believes that it is
more-likely-than-not that the full amount of the net deferred tax assets will be realized in the future.
Uncertain Tax Positions
The Company evaluates tax positions using a more-likely-than-not recognition criterion.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
January 28, 2012 January 29, 2011
(in thousands)
Unrecognized tax benefits, beginning of
year ................................ $ 144 $—
Gross addition as result of Reorganization .... — 144
Gross addition for tax positions of the current
year ................................ 382 —
Gross addition for tax positions of the prior
year ................................ 1,034 —
Reductions of tax positions of prior years for:
Changes in judgement/excess reserve . . . (144) —
Settlements during the period .......... — —
Lapses of applicable statutes of
limitations ....................... — —
Unrecognized tax benefits, end of year ...... $1,416 $144
The amount of the above unrecognized tax benefits as of January 28, 2012 and January 29, 2011 that would
impact the Company’s effective tax rate, if recognized, is $1.4 million and $0.1 million, respectively.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax
expense. The amount of net interest in tax expense related to interest and penalties for 2011 and 2010 was negligible.
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