Lululemon 2013 Annual Report Download - page 62

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Table of Contents
Company's operations and negatively impact earnings. Further, the Company may not be able to obtain adequate insurance to protect it from
these types of litigation matters or extraordinary business losses.
In addition to the legal matters described above, the Company is, from time to time, involved in routine legal matters incidental to its
business. The company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on its continued
financial position, results of operations or cash flows.
13 RELATED PARTY BALANCES AND TRANSACTIONS
The Company entered into the following transactions with related parties:
The Company's principal stockholder owns a retail space that the Company leases for one of its corporate-owned stores. Consulting fees
were paid to a relative of our principal stockholder.
14 SUPPLEMENTAL CASH FLOW INFORMATION
15 INCOME TAXES
The Company files income tax returns in the U.S., Canada and various foreign, state and provincial jurisdictions. The 2012 and 2013 tax
years remain subject to examination by the U.S. federal and state tax authorities. The 2008 tax year is still open for certain state tax authorities.
The 2008 to 2013 tax years remain subject to examination by tax authorities in certain foreign jurisdictions. The Company's policy is to
recognize interest expense and penalties related to income tax matters as a selling, general and administrative expense. At February 2, 2014 , the
Company does not have any significant accruals for interest related to unrecognized tax benefits or tax penalties.
The Company's intercompany transfer pricing policies are currently subject to audits by the various foreign tax jurisdictions. Although the
Company believes that its intercompany transfer pricing policies and tax positions are fully supportable, the final determination of tax audits or
potential tax disputes may be different from that which is reflected in the Company's income tax provisions and accruals.
The provision for income taxes consists of the following:
54
February 2,
2014
February 3,
2013
January 29,
2012
Payments to related parties
Occupancy costs for one corporate-owned store
$
150
$
151
$
134
Consulting fees
$
409
$
295
$
305
February 2,
2014
February 3,
2013
January 29,
2012
Cash paid for income taxes
$
155,394
$
71,342
$
85,633
Interest paid
$
117
$
206
$
155
February 2,
2014
February 3,
2013
January 29,
2012
Federal income tax at statutory rate
35.0
%
35.0
%
35.0
%
Non-deductible compensation expense
0.5
0.8
0.8
U.S. state taxes
1.2
1.2
2.8
Foreign tax rate differential
(7.1
)
(7.7
)
(3.4
)
Permanent and other
—
(
0.5
)
0.9
Provision for income taxes
29.6
%
28.8
%
36.1
%