Express 2014 Annual Report Download - page 62

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The net deferred tax asset at February 1, 2014 shown above excludes a foreign deferred tax asset of $0.4 million
and a corresponding valuation allowance of $0.4 million attributable to other comprehensive income for the
period ended February 1, 2014.
The net increase in the total valuation allowance attributable to foreign operations for the years ended January 31,
2015, and February 1, 2014 was $0.3 million and $0.4 million, respectively. The foreign capital loss
carryforward as of January 31, 2015 and February 1, 2014 was $0.4 million. The Company has established a full
valuation allowance related to the foreign capital loss carryforward. The foreign capital loss carryforward period
is indefinite.
The foreign tax credit carryforward as of February 1, 2014 was $0.2 million and was offset by a full valuation
allowance. As of January 31, 2015, the Company fully utilized its foreign tax credit carryforward.
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.
Current net deferred tax assets are included in other current assets within the Consolidated Balance Sheets and
non-current net deferred tax assets are separately identified. Current net deferred tax liabilities are included in
accrued expenses within the Consolidated Balance Sheets and non-current net deferred tax liabilities are included
in other long-term liabilities. The following table summarizes net deferred tax assets:
January 31, 2015 February 1, 2014
(in thousands)
Current deferred tax liability .............. $(1,844) $ (740)
Non-current deferred taxes ................ 12,371 17,558
Net deferred tax assets ............... $10,527 $16,818
Uncertain Tax Positions
The Company evaluates tax positions using a more likely than not recognition criterion.
A reconciliation of the beginning to ending unrecognized tax benefits are as follows:
January 31, 2015 February 1, 2014 January 28, 2012
(in thousands)
Unrecognized tax benefits, beginning of
year ............................... $4,091 $2,313 $1,416
Gross addition for tax positions of the current
year ............................... 346 1,469 852
Gross addition for tax positions of the prior
year ............................... 129 309 225
Settlements ........................... (2,137) — (180)
Reduction for tax positions of prior years .... (628) — —
Lapse of statute of limitations ............. (150) — —
Unrecognized tax benefits, end of year ...... $1,651 $4,091 $2,313
The amount of the above unrecognized tax benefits as of January 31, 2015, February 1, 2014, and February 2,
2013 that would impact the Company’s effective tax rate, if recognized, is $1.7 million, $4.1 million, and $2.3
million, respectively.
During the second quarter of 2014, the Internal Revenue Service (IRS) completed its examination of the
Company’s 2012, 2011, and 2010 income tax returns. The Company released gross uncertain tax positions of
$2.1 million and the related accrued interest of $0.1 million as a result of the conclusion of this examination.
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