Pier 1 2009 Annual Report Download - page 81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10—INCOME TAXES (Continued)
Deferred tax assets and liabilities from continuing operations at February 28, 2009 and March 1,
2008 were comprised of the following (in thousands):
2009 2008
Deferred tax assets:
Deferred compensation .......................... $ 19,157 $ 16,933
Net operating loss .............................. 109,779 75,924
Accrued average rent ........................... 13,180 13,912
Fixed assets, net ............................... 33,741 17,584
Self insurance reserves .......................... 10,999 9,658
Deferred gain on sale of credit card operations ......... 6,793 7,373
Cumulative foreign currency translation .............. 1,299 1,949
Deferred revenue and revenue reserves .............. 6,380 5,111
Purchased call option ........................... 1,561 2,159
Other ....................................... 6,892 6,630
Total deferred tax assets ......................... 209,781 157,233
Deferred tax liabilities:
Inventory .................................... (27,733) (29,898)
Other ....................................... (1,049) (1,630)
Total deferred tax liabilities ....................... (28,782) (31,528)
Valuation allowance .............................. (180,999) (125,705)
Net deferred tax assets ............................ $ — $ —
During fiscal 2007, the Company recorded a valuation allowance against all deferred tax assets. In
addition, net deferred tax assets arising from losses during fiscal 2009 and 2008 in excess of the amount
expected to be carried back to offset taxable income in a prior year were fully reserved through a
valuation allowance during the respective years. As these deferred tax assets were established and fully
reserved during fiscal 2009 and 2008, there was no net impact to the provision of income taxes.
The difference between income taxes at the statutory federal income tax rate of 35% in fiscal 2009,
2008 and, 2007, and income tax reported in continuing operations in the consolidated statements of
operations is as follows (in thousands):
2009 2008 2007
Tax benefit at statutory federal income tax rate .... $(45,020) $(32,696) $(79,843)
State income taxes, net of federal benefit ........ (12,350) (1,240) (4,091)
Increase in valuation allowance ................ 56,637 36,498 83,047
Net foreign income taxed at lower rates, net of
foreign tax credits ........................ 92 (209) 718
Other, net ............................... 1,265 241 (716)
Provision (benefit) for income taxes from continuing
operations ............................. $ 624 $ 2,594 $ (885)
In July 2006, the FASB issued FASB Interpretation No. 48, ‘‘Accounting for Uncertainty in Income
Taxes—An Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’), which clarifies the accounting for
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