Ulta Beauty, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income taxes

Income taxes

12 Months Ended

Jan. 31, 2015

Income Tax Disclosure [Abstract]

Income taxes

6. Income taxes

The provision for income taxes consists of the following:


(In thousands)	Fiscal 2014		Fiscal 2013			Fiscal 2012
Current:
Federal	$	128,159	$	105,731		$	83,606
State		16,909		15,310			14,832

Total current		145,068		121,041			98,438
Deferred:
Federal		8,392		3,891			8,950
State		714		(75	)		(144	)

Total deferred		9,106		3,816			8,806

Provision for income taxes	$	154,174	$	124,857		$	107,244

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:


	Fiscal 2014			Fiscal 2013			Fiscal 2012
Federal statutory rate		35.0	%		35.0	%		35.0	%
State effective rate, net of federal tax benefit		2.8	%		3.0	%		3.4	%
Other		(0.3	%)		0.1	%		(0.1	%)

Effective tax rate		37.5	%		38.1	%		38.3	%

Significant components of the Company’s deferred tax assets and liabilities are as follows:


(In thousands)	January 31, 2015			February 1, 2014
Deferred tax assets:
Reserves not currently deductible	$	22,380		$	24,721
Employee benefits		8,782			6,290
Credit carryforwards		338			402
Accrued liabilities		8,231			3,927
Inventory valuation		617			1,708

Total deferred tax assets		40,348			37,048
Deferred tax liabilities:
Property and equipment		44,882			44,288
Deferred rent obligation		38,409			28,529
Prepaid expenses		10,775			8,703

Total deferred tax liabilities		94,066			81,520

Net deferred tax liability	$	(53,718	)	$	(44,472	)

At January 31, 2015, the Company had $338 credit carryforwards for state income tax purposes.

The Company accounts for uncertainty in income taxes in accordance with the ASC rules for income taxes. The reserve for uncertain tax positions was $1,414 and $795 at January 31, 2015 and February 1, 2014, respectively. The balance is the Company’s best estimate of the potential liability for uncertain tax positions. A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:


(In thousands)	January 31, 2015			February 1, 2014
Balance at beginning of the period	$	795		$	—
Increase due to a current year position		670			795
Decrease due to a prior period position		(51	)		—

Balance at the end of the period	$	1,414		$	795

The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve months. However, it does not expect the change to have a significant impact on its consolidated financial statements. Income tax-related interest and penalties were insignificant for fiscal 2014 and 2013.

The Company files tax returns in the U.S. Federal and State jurisdictions. The Company is no longer subject to U.S. Federal examinations by the Internal Revenue Services for years before 2011 and this applies to examinations by the State authorities before 2010.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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