Restoration Hardware 2012 Annual Report Download - page 154
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Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
February 2,
2013
January 28,
2012
Current deferred tax assets (liabilities)
Accrued expense $ 11,026 $ 9,970
State tax benefit (931) (1,370)
Inventory 14,215 11,121
Deferred revenue 20,144 12,213
Net operating loss carryforwards 12,337 27,166
Construction allowance (1,698) (1,037)
Prepaid expense and other (18,056) (12,729)
Current deferred tax assets 37,037 45,334
Valuation allowance (31) (41,173)
Net current deferred tax assets 37,006 4,161
Non-current deferred tax assets (liabilities)
State tax benefit (2,040) (892)
Stock-based compensation 21,231 —
Deferred lease credits 9,687 4,251
Property and equipment (5,975) (2,061)
Net operating loss carryforwards 262 7,525
U.S. impact of Canadian transfer pricing 2,091 3,760
Trademarks (19,361) (19,275)
Other 1,240 850
Non-current deferred tax assets (liabilities) 7,135 (5,842)
Valuation allowance (262) (16,311)
Net non-current deferred tax assets
(liabilities) 6,873 (22,153)
Net deferred tax assets (liabilities) $ 43,879 $(17,992)
A reconciliation of the valuation allowance is as follows (in thousands):
Year Ended
February 2,
2013
January 28,
2012
January 29,
2011
Balance at beginning of fiscal year $ 57,484 $ 68,318 $65,087
Charged to expense (57,185) 299 (236)
Net changes in deferred tax assets and liabilities (6) (11,133) 3,467
Balance at end of fiscal year $ 293 $ 57,484 $68,318
The Company has recorded deferred tax assets and liabilities based upon estimates of their realizable value,
such estimates are based upon likely future tax consequences. In assessing the need for a valuation allowance, the
Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax
assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not
be realized, the Company records a valuation allowance.
As of the end of fiscal year 2012, the Company’s U.S. operations achieved a position of cumulative profits
(adjusted for permanent differences) for the most recent three-year period. The Company concluded that this
record of cumulative profitability in recent years, coupled with its business plan for profitability in future periods,
98