Pier 1 2014 Annual Report Download - page 54

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On December 30, 2010, the Company entered into a new program agreement with Chase, effective January 1, 2011, with an
original term of 18 months (the term was subsequently reduced to 15 months when conversion to a new provider was
completed). In conjunction with this agreement, the Company and Chase terminated the original program agreement between
the Company and Chase in consideration of payment to the Company from Chase of $28,326,000 plus all remaining sums due
to the Company by Chase. The Company was entitled to future payments over the term of the new program agreement based
on revolving credit card sales, and certain other credit and account related matters. The Company received total payments of
$160,000 and $1,574,000 related to these program agreements during fiscal 2013 and 2012, respectively, and recognized
them as a component of net sales. The $28,326,000 in consideration received from Chase was also deferred and was
previously recognized over the new term of the agreement as a component of revenue consistent with the treatment of
transaction-based amounts previously received under the original program agreement. The Company recognized approximately
$2,715,000 and $22,706,000 of this amount in fiscal 2013 and 2012, respectively.
NOTE 8 — INCOME TAXES
The components of income before taxes, by tax jurisdiction were as follows (in thousands):
2014 2013 2012
Domestic $165,658 $191,494 $151,663
Foreign 8,991 9,506 12,444
Income before taxes $174,649 $201,000 $164,107
The provision (benefit) for income taxes for each of the last three fiscal years consisted of (in thousands):
2014 2013 2012
Federal:
Current $43,325 $45,797 $ 32,734
Deferred 16,311 15,635 (34,107)
State:
Current 5,234 4,738 1,659
Deferred (2,404) 4,293 (7,808)
Foreign:
Current 4,652 1,093 2,691
Deferred ———
Total provision (benefit) for income taxes $67,118 $71,556 $ (4,831)
The differences between income taxes at the statutory federal income tax rate of 35% in fiscal 2014, 2013 and 2012, and
income tax reported in the consolidated statements of operations were as follows (in thousands):
2014 2013 2012
Tax provision at statutory federal income tax rate $61,127 $70,350 $ 57,437
State income taxes, net of federal provision 3,138 6,838 6,408
Decrease in valuation allowance (1,298) (1,034) (60,751)
Foreign income taxes 4,652 1,093 2,691
Foreign and other tax credits (5,444) (1,785) (3,429)
Other, net 4,943 (3,906) (7,187)
Provision (benefit) for income taxes $67,118 $71,556 $ (4,831)
Effective tax rate 38.4% 35.6% (2.9)%
50 PIER 1 IMPORTS, INC. 2014 Form 10-K