2.
Income Taxes--(continued)
The deferred tax assets and deferred tax liabilities recorded on the accompanying balance sheets
are as follows (dollars in thousands):
February 23, 2002
February 24, 2001
Deferred Tax
Deferred Tax
Assets
Liabilities
Assets
Liabilities
Current:
Catalog deferrals . . . . . . . . . . . . . . . . . . . . . . .
$
--
$ 2,268
$
--
$ 2,869
Charitable contributions . . . . . . . . . . . . . . . . .
--
--
1,396
--
Valuation allowance--charitable
contributions . . . . . . . . . . . . . . . . . . . . . . . .
--
--
(1,232)
--
Inventory capitalization . . . . . . . . . . . . . . . . .
1,135
--
1,213
--
Accrued expenses . . . . . . . . . . . . . . . . . . . . . .
1,102
--
1,507
--
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
377
53
256
9
Total current . . . . . . . . . . . . . . . . . . . . . . . .
2,614
2,321
3,140
2,878
Non-current:
Depreciation/amortization . . . . . . . . . . . . . . .
--
2,340
--
2,604
Deferred compensation . . . . . . . . . . . . . . . . .
1,698
--
1,456
--
Collar hedge for paper . . . . . . . . . . . . . . . . . .
1,183
--
--
--
State net operating loss carryforward. . . . . . .
109
--
--
--
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
463
--
382
--
Total non-current . . . . . . . . . . . . . . . . . . . .
3,453
2,340
1,838
2,604
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$6,067
$ 4,661
$4,978
$ 5,482
The valuation allowance at February 24, 2001 related to the Company's assessment of the
amount of charitable contributions carryforward that would expire unused. As of February 23,
2002, the Company's charity carryforwards have expired.
As of February 23, 2002, the Company has recorded a net deferred tax asset of $1.4 million. The
ultimate realization of the Company's net deferred tax asset is dependent upon the generation of
sufficient amounts of future taxable income during the years in which the related net expenses
become deductible. The Company's ability to generate sufficient taxable income in future
periods is contingent upon a number of factors, including general economic conditions and the
Company's sales levels in future periods. Although management has developed plans which
should enable the Company to achieve sufficient income levels in the future, there can be no
assurance that the plans will be successful in enabling the Company to generate sufficient
taxable income in the periods in which the net expenses become deductible. However, the
Company has developed certain tax planning strategies relating to the sale and leaseback of
certain of its facilities, which could be employed, if necessary, to generate taxable income in
amounts sufficient enough to offset the impact of the net deductible expenses. Accordingly, the
Company has not recorded a valuation allowance with respect to the net deferred tax asset as of
February 23, 2002.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
L I L L I A N V E R N O N
