Restoration Hardware 2014 Annual Report Download - page 103
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Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
January 31,
2015
February 1,
2014
Current deferred tax assets (liabilities)
Accrued expense $ 22,469 $ 22,164
State tax benefit (843) 428
Inventory 26,067 19,350
Deferred revenue 1,281 1,891
Construction allowance (1,697) (1,694)
Stock-based compensation 2,704 1,038
Prepaid expense and other (22,182) (21,896)
Current deferred tax assets 27,799 21,281
Valuation allowance (28) (26)
Net current deferred tax assets 27,771 21,255
Non-current deferred tax assets (liabilities)
State tax benefit (2,507) (2,536)
Stock-based compensation 27,190 34,005
Deferred lease credits 14,963 12,884
Property and equipment (17,113) (12,362)
Net operating loss carryforwards 752 884
U.S. impact of Canadian transfer pricing 1,410 1,780
Trademarks and domain names (18,271) (19,327)
Other 2,412 1,832
Non-current deferred tax assets 8,836 17,160
Valuation allowance (147) (180)
Net non-current deferred tax assets 8,689 16,980
Net deferred tax assets $ 36,460 $ 38,235
A reconciliation of the valuation allowance is as follows (in thousands):
Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Balance at beginning of fiscal year $206 $293 $ 57,484
Charged to expense — — (57,185)
Net changes in deferred tax assets and liabilities (30) (87) (6)
Balance at end of fiscal year $176 $206 $ 293
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,
provided assurance that its future tax benefits more likely than not would be realized. Accordingly, in fiscal
2012, the Company released all of its U.S. valuation allowance of $57.2 million against net deferred tax assets.
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