Supercuts 2011 Annual Report Download - page 131

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. INCOME TAXES (Continued)
than U.S. rates adversely impacted the annual effective tax rate due to a decrease in foreign income from continuing operations before income
taxes and other foreign non-deductible items.
The (5.4) percent of other, net in fiscal year 2011 includes the rate impact of meals and entertainment, donated inventory, unrecognized tax
benefits, and miscellaneous items of 2.8, (3.0), (3.7), and (1.5) percent, respectively.
During the fiscal year 2010, the Company recorded adjustments to correct its income tax balances. The adjustments increased the
Company's fiscal year 2010 income tax provision by $2.1 million and increased its effective income tax rate by 3.9 percent. Included in the
income tax provision are U.S. and international income tax adjustments resulting in a shift of the income tax provision between jurisdictions. On
a world-wide basis the adjustments are immaterial. The Company does not believe the adjustments are material to its fiscal 2010 results of
operations or its financial position or results of operations of any prior periods.
During the fourth quarter of fiscal year 2009, the Company recorded an adjustment to correct its prior year deferred income tax balances.
The adjustment increased the Company's fiscal year 2009 income tax provision by $3.8 million and increased its effective income tax rate by
4.8 percent. The Company does not believe the adjustment is material to its fiscal 2009 results of operations or its financial position or results of
operations of any prior periods.
The components of the net deferred tax assets and liabilities are as follows:
126
2011
2010
(Dollars in thousands)
Deferred tax assets:
Deferred rent
$
15,233
$
15,677
Payroll and payroll related costs
37,852
34,294
Net operating loss carryforwards
1,210
2,106
Salon asset impairment
5,176
4,154
Inventories
2,968
3,136
Derivatives
229
311
Deferred gift card revenue
1,536
1,581
Federal and state benefit on uncertain
tax positions
8,549
10,178
Allowance for doubtful accounts/notes
9,855
575
Insurance
5,669
6,301
Other
6,167
5,481
Total deferred tax assets
$
94,444
$
83,794
Deferred tax liabilities:
Depreciation
$
(29,348
)
$
(17,603
)
Amortization of intangibles
(94,257
)
(107,392
)
Accrued property taxes
(1,942
)
(2,029
)
Deferred debt issuance costs
(6,215
)
(7,937
)
Other
(3
)
—
Total deferred tax liabilities
$
(131,765
)
$
(134,961
)
Net deferred tax liabilities
$
(37,321
)
$
(51,167
)