15 INCOME TAXES

The Company files income tax returns in the U.S., Canada and various foreign, state and provincial jurisdictions. The 2011 and 2012 tax years remain subject to examination by the U.S. federal and state tax authorities. The 2008 tax year is still open for certain state tax authorities. The 2008 to 2012 tax years remain subject to examination by tax authorities in certain foreign jurisdictions. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a selling, general and administrative expense. At February 3, 2013, the Company does not have any significant accruals for interest related to unrecognized tax benefits or tax penalties.

The Company’s intercompany transfer pricing policies are currently subject to audits by the various foreign tax jurisdictions. Although the Company believes that its intercompany transfer pricing policies and tax positions are fully supportable, the final determination of tax audits or potential tax disputes may be different from that which is reflected in the Company’s income tax provisions and accruals.

The provision for income taxes consists of the following:


	February 3, 2013			January 29, 2012			January 30, 2011
Federal income tax at statutory rate		35.0	%		35.0	%		35.0	%

Non-deductible compensation expense		0.8			0.8			0.8
U.S. state taxes		1.2			2.8			1.7
Foreign tax rate differential		(7.7	)		(3.4	)		(4.0	)
Permanent and other		(0.5	)		0.9			(0.2	)

Provision for income taxes		28.8	%		36.1	%		33.3	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at February 3, 2013 and January 29, 2012 are presented below:


	February 3, 2013			January 29, 2012
Deferred tax assets/(liabilities)
Net operating loss carryforward	$	2,397		$	655
Foreign tax credits		4,585			—
Property and equipment		(13,151	)		(6,957	)
Deferred lease liability		6,243			5,825
Lease exit costs		—			957
Stock-based compensation		3,317			2,171
Inventory		5,372			1,230
Tenant inducements		4,506			3,505
Other		1,764			1,201

	$	15,033		$	8,587

The Company’s current and deferred taxes from federal, state and foreign sources were as follows:


	February 3, 2013			January 29, 2012			January 30, 2011
Income before provision for income taxes
Domestic	$	63,426		$	114,481		$	57,583
Foreign		317,970			174,977			125,694

Income before provision for income taxes		381,396			289,458			183,277

Current taxes
Federal	$	22,598		$	45,623		$	9,476
State		3,795			8,438			2,435
Foreign		90,017			51,126			37,935

Total current		116,410			105,187			49,846

Deferred taxes
Federal	$	(5,667	)	$	73		$	11,182
State		(786	)		12			635
Foreign		8			(778	)		(583	)

Total deferred		(6,445	)		(693	)		11,234

Provision for income taxes	$	109,965		$	104,494		$	61,080

U.S. income and foreign withholding taxes have not been provided on approximately CDN $437,009 at February 3, 2013 of cumulative undistributed earnings of foreign subsidiaries. The Company intends to reinvest these earnings for the foreseeable future. If these amounts were distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.