Pier 1 2015 Annual Report Download - page 59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets and liabilities at February 28, 2015 and March 1, 2014 were comprised of the following (in thousands):
2015 2014
Deferred tax assets:
Deferred compensation $ 22,711 $ 21,490
Net operating loss carryforward 533 2,465
Accrued average rent 11,540 10,140
Self insurance reserves 10,855 10,717
Cumulative foreign currency translation 4,310 2,971
Deferred revenue and revenue reserves 6,375 3,825
Supplemental retirement plans 2,227 1,788
Foreign and other tax credits 2,931 5,667
Other 1,845 1,382
Total deferred tax assets 63,327 60,445
Deferred tax liabilities:
Properties, net (21,389) (10,483)
Inventory (22,231) (20,497)
Store supplies (3,942) (3,928)
Deferred gain on debt repurchase (14,716) (18,370)
Other (787) (451)
Total deferred tax liabilities (63,065) (53,729)
Valuation allowance (422) (646)
Net deferred tax assets (1) $ (160) $ 6,070
(1) The current portion of the Company’s deferred tax assets was included in prepaid expense and other current assets. For fiscal 2015, the current portion of deferred tax assets was $577 and
related to state deferred tax assets. For fiscal 2014, the current portion of deferred tax assets was $4,154 and related to federal and state deferred tax assets. The current portion of deferred tax
liabilities was $763 for fiscal 2015 and related to federal deferred tax liabilities. The current portion of deferred tax liabilities was included in other accrued liabilities.
Noncurrent deferred tax assets were included in other noncurrent assets. For fiscal 2015 and 2014, noncurrent deferred tax assets were $5,027 and $6,753, respectively, and related to state
deferred tax assets. The noncurrent deferred tax liabilities were $5,001 and $4,837 for fiscal 2015 and 2014, respectively, and related to federal deferred tax liabilities. The noncurrent deferred
tax liabilities were included in other noncurrent liabilities.
Deferred tax assets related to state net operating losses at February 28, 2015 and March 1, 2014, were $533,000 and
$2,465,000, respectively. State loss carryforwards vary as to the carryforward period and will expire from fiscal 2016 through
fiscal 2030. The Company believes that it is not more likely than not that the benefit from certain state tax credits will be realized.
Accordingly, the Company has provided a valuation allowance of $422,000 and $646,000 with respect to the deferred tax
assets relating to these state tax credits as of February 28, 2015 and March 1, 2014, respectively.
The Company is subject to taxation in the United States and various state, provincial and local and foreign (primarily Canadian)
jurisdictions. With few exceptions, as of fiscal 2015, the Company is no longer subject to U.S. federal or state examinations by
tax authorities for years before fiscal 2013. Certain tax years prior to fiscal 2013 are subject to examination by certain foreign
jurisdictions. Fiscal 2013 and 2014 are currently under examination by the Internal Revenue Service.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
2015 2014 2013
Unrecognized tax benefits — beginning balance $ 6,673 $ 2,194 $ 8,731
Gross increases — tax positions in prior period 282 5,664 1,171
Gross decreases — tax positions in prior period (1,458) — (1,054)
Settlements (4,732) (1,185) (1,965)
Expiration of statute of limitations — — (4,689)
Unrecognized tax benefits — ending balance $ 765 $ 6,673 $ 2,194
As of February 28, 2015, the Company had total unrecognized tax benefits of $765,000, the majority of which would, if
recognized, affect the Company’s effective tax rate. As March 1, 2014, the Company had unrecognized tax benefits of
PIER 1 IMPORTS, INC. 2015 Form 10-K 53