Restoration Hardware 2014 Annual Report Download - page 102

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As the Company’s debt obligations under the revolving line of credit are variable rate, there are no
significant differences between the estimated fair value (level 2) and carrying value.
Non-Financial Assets
As discussed in Note 3—Significant Accounting Policies, the Company did not record an impairment charge
on long-lived assets in fiscal 2014 or fiscal 2012. In fiscal 2013, the Company recorded an impairment charge of
$1.4 million related to the underperformance of a stand-alone Baby & Child Gallery. The impairment charge
reduced the then carrying amount of the applicable long-lived assets of $1.4 million to their fair value of zero
dollars. The fair value of the long-lived assets was determined using level 3 inputs and the valuation techniques
discussed in Note 3—Significant Accounting Policies.
NOTE 12—INCOME TAXES
The following is a summary of the income tax expense (benefit) (in thousands):
Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Current
Federal $45,611 $21,593 $ —
State 9,235 4,182 236
Foreign (596) (454) (387)
Total current tax expense (benefit) 54,250 25,321 (151)
Deferred
Federal 3,895 6,215 (48,745)
State (973) (596) (12,903)
Foreign 1 (17) (224)
Total deferred tax expense (benefit) 2,923 5,602 (61,872)
Total income tax expense (benefit) $57,173 $30,923 $(62,023)
A reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:
Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Provision at federal statutory tax rate 35.0% 35.0% 35.0%
State income taxes—net of federal tax impact 4.0 5.8 0.7
Stock-based compensation — 21.3 (30.0)
Valuation allowance — (0.1) 76.5
Foreign income (0.3) (0.2) 0.6
Net adjustments to tax accruals and other (0.1) 1.2 0.1
Effective tax rate 38.6% 63.0% 82.9%
98