Chamberlain Commerce 354 Assignment for Self-Study Danier Part 1: Review of Cost Flows and Cost Terms 1. What are the total product costs for Danier as reflected in the income statement for 2008? What are the total period costs in 2008 as reflected in the income statement? 2. What are the product costs for Danier as reflected in its balance sheet for 2008? 3. What is a variable cost? What is a fixed cost? Why would it be useful to separate variable costs from fixed costs at Danier? 4. Use the information in the excerpted financial statements to estimate the fraction of operating costs in the 2008 income statement that are variable. Show your work. Part 2 Review of Strategy and Value Chain Skim or read the following sections of the first 5 pages of the excerpted annual report for Danier (2008). Contemplate the value chain for Danier.
a. Sketch out Danier=s value chain. Annotate the value chain as per the example from Session 2 Brewery. What parts of the value chain are completed by Danier and which parts are out-sourced? b. What is Danier=s value proposition? Explain briefly why you think this is the value proposition. c. Another way to buy a leather coat is to visit the Men=s or Women=s department at The Bay (large clothing deparment store.) How does Danier=s value proposition and position in the market differ from the value proposition and position at The Bay? Is Danier=s strategy a good one? How do you know? What trade-offs is Danier making by selecting its particular position in the market?
Financial Highlights (in thousands of dollars, except earnings per share and shares outstanding)
2008 2007 2006 2005 2004
Sales 163,550 158,099 148,351 166,350 175,270Gross Profit 76,185 78,534 71,398 83,487 86,528Earnings (loss) before income tax, restructuring costs and litigation provision (2,478) 2,601 (6,953) 6,612 8,734Adjusted EBITDA(1) 3,757 8,757 (1,159) 12,488 14,487Adjusted Net Earnings (loss)(1) (1,828) 1,653 (4,586) 4,849 5,466Net Earnings (loss) 12,892 1,653 (5,503) (185) (7,097)Earnings (loss) Per Share
Basic $2.04 $0.25 (0.84) (0.03) (1.03)Diluted $2.03 $0.25 (0.84) (0.03) (1.03)
Shares Outstanding at year-end 6,276,429 6,433,754 6,553,254 6,546,154 6,944,554
Selected Balance Sheet DataCash 19,882 20,579 11,833 21,193 22,576Working Capital 38,648 26,147 36,380 44,285 44,202Total Assets 73,063 81,746 82,210 83,365 89,869Long-term Debt - 858 1,829 nil nilShareholders’ Equity 60,133 48,709 47,956 54,937 61,287(1)See section entitled MD&A – Non-GAAP Measures
Selected Financial Information2008 2007 2006 2005 2004
Comparable store sales increase/(decrease) 6% 9% (11%) (6%) (4%)
Sales ($000)Shopping Mall/Street-Front/Direct Sales $ 86,050 $ 79,533 $ 72,397 $ 81,280 $ 83,283Power Centre 77,500 78,566 75,954 85,070 91,987
Total $ 163,550 $ 158,099 $ 148,351 $ 166, 350 $ 175,270
Retail square footageShopping Mall/Street-Front 110,658 109,378 115,438 117,309 113,476Power Centre 237,846 237,846 260,119 254,645 258,680
Total 348,504 347,224 375,557 371,954 372,156
Number of storesShopping Mall/Street-Front 54 53 55 56 55Power Centre 37 37 40 39 40
Total 91 90 95 95 95
3
Letter to Shareholders
There is no doubt that the most significant event in fiscal 2008 was the
successful conclusion at the Supreme Court of Canada of a 9 year old
lawsuit. Winning the suit and collecting costs added back $20 million in
pre-tax income, of which $2 million was in cash. Just as important it puts a
significant distraction behind us and lets us focus solely on the business.
In difficult economic times there is often a run to value and our history has
shown, and our belief is, that a leather jacket is expected to, and will last
longer, than a non-leather jacket so that there is more value for the money
in a well priced leather jacket.
In fiscal 2009 we expect to reinforce the brand promise of style, quality
and value to our advantage. Our focus is to improve execution on existing
strategy by delivering collections that offer customers a selection of good,
better and best, by differentiating the Mall Store from the Factory Outlet
experience, by improved marketing return, by exciting customers with new
and innovative fashions, by growing the International business, and by
expanding on the success of our accessories business which saw a 29%
increase in gross margin dollars last year.
I would like to thank our customers for their continued loyalty; our
long term business partner, CIBC for continuing in their long standing
relationship with Danier Leather; and our front line Store and Head Office
staff for their everyday efforts to delight customers and make them feel
good about themselves.
Yours very truly,
Jeffrey Wortsman
President and CEO
Danier Leather Inc.
5
About Danier
Founded in 1972, Danier has beenmanufacturing and retailing for over aquarterofacentury,earninginternationalrecognitionasaleaderinleatherand suede design. As a vertically integrated designer, manufacturer andretailer,Danier isabletooffercustomersexceptionalvalue inadditiontooutstanding quality. Our in-house design team searches the world forthe most inspiring trends and skillfully interprets them into timelessand sophisticated leather clothing and accessories that work inanyone’swardrobe.
Danier’sdedicationandcommitmenttocustomersatisfactionhasearnedittheappreciationof thosewhoseekstylewithqualityandvalue.Danier ispassionateaboutdeliveringonitsmission:“ToSatisfyourCustomers’NeedtoFeelGoodaboutThemselves.”
Danier’smerchandiseismarketedexclusivelyunderthewell-knownDanierbrand name and is available only at its 91 shoppingmall, street-front andpowercentrestoresacrossCanadaorthroughitscorporatesalesdivision.Danier’sproductsarealsoavailableattheFestivalCityMallinDubai.
DanierisapubliccompanylistedontheTorontoStockExchangeunderthetradingsymbolDL.
The Danier BrandTo achieve superior brand recognition, Danier ensures that all productlinessharethreeattributes:timelessandsophisticatedstyling;highqualityfabricationsandremarkablevalue.
The Danier brand occupies a distinct and carefully cultivated niche in afragmentedandpolarizedmarket.Therearevirtuallynomajorleatherandsuede specialty retailers outside of North America, and those that existare largelyconcentratedat themarket’sextremehighor lowends.Danieris unique in this regard as Danier appeals to the large segment of themarketthatdesiresleatherandsuedeproductsthatoffertimelessnessandsophistication,highquality,andremarkablevalueallinonepackage.
TheDanierbrandisleveragedthroughouteachofitsproductlinesandisalsoreinforcedatthestorelevelandthroughfrequentandeffectiveadvertisingandmarketingcampaigns.
7
Vertical IntegrationDanierisrareamonglargeleatherretailersinthatweareafullyverticallyintegrated company. In otherwords,wehave a level of expertise that isunparalledintheindustryandwecontroleverystepoftheretailingprocess– from leather sourcing, to product design, to domestic and overseasmanufacturingandretailing.There is simplynosubstitute forexperienceandourextensivenetworkofcontactsandrigorousstandardshavebeenthe key to our excellent relationships with tanneries. Our size, financialstrength, and year-roundpurchasing have earnedus preferred customerstatusandenableustoselectthebestqualitymaterialsthatmaketheirwayintoDanierproducts.
Our People and ValuesWhether in our stores, manufacturing facility, corporate head office orsourcingofficeinChina,theentireDanierteamisdedicatedtosatisfyingourcustomers’needtofeelgoodaboutthemselves.Ourcorevaluesandbeliefsarecentredon:• Alwaysrememberingthecustomers’pointofview• Havingapassionforourcustomers,productsandwork• Findingwaystodothingsbetter• Findingsolutionstoproblems• Everyoneshouldspeakfreelyaboutwaystoimproveourbusinesswhile
alsolisteningtoothers.
About Danier
10
Danier cautions readers that this list of factors is not exhaustive and that should certain risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary
significantly from those expected. There can be no assurance that the actual results, events or activities
anticipated by the Company will be realized or, even if substantially realized, that they will have the
expected consequences to, or effects on, the Company. Potential investors and other readers are urged
to consider these factors carefully in evaluating forward-looking statements and are cautioned not to
place undue reliance on any forward-looking statements.
For additional information with respect to certain of these risks or uncertainties, reference should
be made to Danier’s continuous disclosure materials filed from time to time with Canadian Securities
Regulatory Authorities, including the Company’s annual information form, quarterly and annual reports,
and supplementary information, which are available on SEDAR at www.sedar.com and in the Investor
Relations section of the Company’s website at www.danier.com. Additional risks and uncertainties
not presently known to the Company or that Danier currently believes to be less significant may also
adversely affect the Company. Danier disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
Business OverviewDanier has been in the leather apparel business for more than 35 years and is one of the largest publicly
traded specialty-apparel leather retailers in the world. As a vertically integrated designer, manufacturer
and retailer, Danier is able to offer its customers high-quality, timeless and sophisticated leather clothing
and accessories at exceptional value. Danier’s products are sold exclusively at its 91 shopping mall stores,
street-front stores and large format power centre locations in Canada and through its corporate sales
division. Danier’s products are also available at Festival City Mall in Dubai.
Danier’s business strategy over the next several years will include:
1. Its Core Business of Leather Garments As the leader in leather outerwear and sportswear in Canada, Danier will continue to focus on being
the dominant destination for better leather outerwear and sportswear. During 2008, outerwear
represented approximately 63% of Danier’s total sales and sportswear represented another 15% of
Danier’s total sales.
2. Continued Growth of Accessories Accessory sales represented 22% of total Company revenue during 2008 compared with 19%
during 2007. Danier’s long-term objective is to continue to grow this line of business.
3. Selectively Open New Store Locations Danier operates 54 shopping mall and street-front stores and 37 power centre locations (large
format stores). Shopping mall, street-front and power centre locations will be selectively added
where sales, store profit and return on investment criteria are met.
4. Corporate Sales Sales of Danier products to corporations and other organizations for use as incentives and
premiums for employees, suppliers and customers offer an incremental sales opportunity.
Danier believes incremental sales can be achieved by providing corporate customers with
unique, innovative and exciting merchandise. Danier’s strong brand and expertise in leather
design and manufacturing provide a solid foundation for the development of a successful
corporate sales business.
5. International Licensing opportunities for countries outside of North America will continue to be explored.
Danier currently has one store under license in Dubai in the United Arab Emirates.
31
Consolidated Financial Statements For the Years Ended June 28, 2008 and June 30, 2007
Consolidated Statements of Earnings and Comprehensive Earnings (thousands of dollars, except per share amounts and number of shares)
For the Year Ended
June 28, 2008 June 30, 2007Revenue $ 163,550 $ 158,099
Cost of sales (Note 9) 87,365 79,565
Gross profit 76,185 78,534
Selling, general and administrative expenses (Note 9) 78,582 76,360
Interest expense (income) – net 81 (427)
Earnings (loss) before undernoted item and income taxes (2,478) 2,601Litigation provision (recovery) and related expenses (Note 11) (20,016) -
Earnings before income taxes 17,538 2,601
Provision for (recovery of) income taxes (Note 10)
Current 192 1,168
Future 4,454 (220)
4,646 948
Net earnings and comprehensive earnings $ 12,892 $ 1,653
Net earnings per share:Basic $2.04 $0.25
Diluted $2.03 $0.25
Weighted average number of shares outstanding:Basic 6,313,583 6,532,680
Diluted 6,335,873 6,547,416
Number of shares outstanding at period end 6,276,429 6,433,754
See accompanying notes to the consolidated financial statements.
32
Consolidated Balance Sheets (thousands of dollars)
June 28, 2008 June 30, 2007
Assets Current Assets
Cash $ 19,882 $ 20,579
Accounts receivable 755 724
Income taxes recoverable 8 -
Inventories (Note 4) 27,404 28,561
Prepaid expenses 1,242 1,446
Future income tax asset (Note 10) 562 5,112
49,853 56,422
Other AssetsProperty and equipment (Note 5) 21,312 23,575
Goodwill 342 342
Future income tax asset (Note 10) 1,556 1,407
$ 73,063 $ 81,746
LiabilitiesCurrent Liabilities
Accounts payable and accrued liabilities $ 9,845 $ 9,387
Income taxes payable - 1,473
Current portion of capital lease obligation (Note 7) 858 971
Accrued litigation provision and related expenses (Note 11) - 18,000
Future income tax liability (Note 10) 502 444
11,205 30,275
Capital lease obligation (Note 7) - 858
Deferred lease inducements and rent liability 1,675 1,849
Future income tax liability (Note 10) 50 55
- 12,930 33,037
Shareholders’ EquityShare capital (Note 8) 21,409 22,044
Contributed surplus 548 431
Retained earnings 38,176 26,234
- 60,133 48,709
$ 73,063 $ 81,746
See accompanying notes to the consolidated financial statements.
Approved by the Board Edwin F. Hawken, Director Jeffrey Wortsman, Director
33
Consolidated Statements of Cash Flow (thousands of dollars)
For the Years Ended
June 28, 2008 June 30, 2007
Operating ActivitiesNet earnings $ 12,892 $ 1,653
Items not affecting cash:
Amortization (Note 9) 6,154 6,583
Amortization of deferred lease inducements and other (453) (493)
Straight line rent expense 116 172
Stock based compensation 117 156
Accrued litigation provision (recovery) and related expenses (Note 11) (18,000) -
Future income taxes 4,454 (220)
Net change in non-cash working capital items (Note 12) 363 5,626
Proceeds from deferred lease inducements 107 -
Repayment of deferred lease inducement - (59)
Cash flows from operating activities 5,750 13,418
Financing ActivitiesSubordinate voting shares issued (Note 8) 80 24
Subordinate voting shares repurchased (Note 8) (1,665) (1,080)
Repayment of obligations under capital lease (971) (911)
Cash flows used in financing activities (2,556) (1,967)
Investing ActivitiesAcquisition of capital assets (3,891) (2,865)
Proceeds from sublease - 160
Cash flows used in investing activities (3,891) (2,705)
Increase (decrease) in cash (697) 8,746
Cash, beginning of period 20,579 11,833
Cash, end of period $ 19,882 $ 20,579
Supplementary cash flow information:Interest paid 414 280
Income taxes paid 1,679 -
See accompanying notes to the consolidated financial statements.
35
Notes to Consolidated Financial StatementsFor the Years Ended June 28, 2008 and June 30, 2007
(dollar amounts in thousands except per share amounts and where otherwise indicated)
Danier Leather Inc. (“Danier” or “the Company”) is incorporated under the Business Corporations
Act (Ontario) and is a vertically integrated designer, manufacturer and retailer of leather apparel
and accessories.
Note 1: Summary of Significant Accounting PoliciesThe consolidated financial statements have been prepared in accordance with Canadian generally
accepted accounting principles (“GAAP”).
(a) Basis of consolidation:
The consolidated financial statements include the accounts of the Company and its wholly
owned subsidiary companies. On consolidation, all intercompany transactions and balances have
been eliminated.
(b) Year-end:
The fiscal year end of the Company consists of a 52 or 53 week period ending on the last Saturday
in June each year. The fiscal year for the consolidated financial statements presented is the 52-
week period ended June 28, 2008, and comparably the 53-week period ended June 30, 2007.
(c) Revenue recognition:
Revenue includes sales to customers through stores operated by the Company, sales to corporate
customers through the Company’s direct sales division and sales to third party licensees. Sales
to customers through stores operated by the Company are recognized at the time the transaction
is entered into the point-of-sale register net of returns. Sales to corporate customers and third
party licensees are recognized at the time of shipment. Revenue from gift cards is recognized at
the time of redemption. When a customer purchases a gift card a liability is recorded based on the
dollar value of the gift card purchased. Unredeemed balances on gift cards that are more than
two years old from the date of issuance (or “breakage”) are recorded in the consolidated statement
of earnings. Historically, breakage has not been material.
(d) Cash:
Cash consists of cash on hand, bank balances, and money market investments with maturities of
three months or less.
(e) Inventories:
Inventories are valued at the lower of cost or market. Cost is determined using the weighted
average cost method. For raw materials, cost includes invoice cost, duties, freight and brokerage.
For finished goods purchased from third party vendors, cost includes invoice cost, overhead, duties,
freight and brokerage. For finished goods manufactured by the Company, cost includes raw
materials, labour and overhead. For finished goods and work-in-process, market is defined as the
expected selling price; for raw materials, market is defined as replacement cost. In addition, a
provision is recorded to reduce the cost of inventories for obsolete, damaged and slow moving
items to their estimated net realizable values.
(f) Property and equipment:
Property and equipment are recorded at cost and annual amortization is provided at the
following rates:
Building ...............................................................................................................4% declining balance
Furniture and equipment ..........................................................................20% declining balance
Computer hardware and software ........................................................30% declining balance
Computer hardware and software under capital lease ................30% declining balance
Visual merchandising equipment ................................................................. 2 years straight line
Leasehold improvements are amortized on a straight line basis over the term of the lease,
unless the Company has decided to terminate the lease, at which time the unamortized
balance is written off.
36
Property and equipment are reviewed for impairment at least annually or when events or
circumstances indicate their carrying value exceeds the sum of the undiscounted cash flows
expected from their use and eventual disposal. For purposes of annually reviewing store assets for
impairment, asset groups are reviewed at their lowest level for which identifiable cash flows are
largely independent of cash flows of other assets and liabilities. Therefore, store net cash flows
are grouped together by regional areas where a number of stores operate within close proximity
to one another. An impairment loss is recognized when the carrying amount of property and
equipment is not recoverable and exceeds its estimated fair value.
(g) Goodwill:
Goodwill represents the excess of the cost of acquisition over the fair market value of the
identifiable assets acquired. Goodwill is not amortized, but is tested for impairment at least
annually at year-end. If required, any impairment in the value of goodwill would be written off
against earnings.
(h) Deferred lease inducements and rent liability:
Deferred lease inducements represent cash benefits received from landlords pursuant to store
lease agreements. These lease inducements are amortized against rent expense over the term of
the lease, not exceeding 10.5 years.
Rent liability represents the difference between minimum rent as specified in the lease and rent
calculated on a straight line basis.
(i) Store opening costs:
Expenditures associated with the opening of new stores, other than furniture and fixtures,
equipment, and leasehold improvements are expensed as incurred.
(j) Prepaid advertising production costs:
Advertising production costs for newspaper flyer inserts and other media are generally incurred
several months before the advertising occurs. These expenses are deferred and expensed the first
time the advertising occurs. Prepaid advertising production costs were $332 as at June 28, 2008
(June 30, 2007 - $480) and are included in prepaid expenses on the consolidated balance sheet.
(k) Income taxes:
Income taxes are determined using the asset and liability method of accounting. This method
recognizes future tax assets and liabilities that arise from differences between the accounting basis
of the Company’s assets and liabilities and their corresponding tax basis. Future taxes are measured
at the balance sheet date using enacted or substantially enacted income tax rates expected to
apply when the asset is realized or the liability settled. The Company provides a valuation allowance
for future tax assets when it is more likely than not that some or all of the future tax assets will not
be realized.
(l) Earnings per share:
Basic earnings per share is calculated by dividing the net earnings available to shareholders by the
weighted average number of shares outstanding during the year (see Note 8). Diluted earnings per
share is calculated using the treasury stock method, which assumes that all outstanding stock
options with an exercise price below the average monthly market price are exercised and the
assumed proceeds are used to purchase the Company’s shares at the average monthly market
price during the fiscal year.
(m) Translation of foreign currencies:
Accounts in foreign currencies are translated into Canadian dollars. Monetary balance sheet items
are translated at the rates of exchange in effect at year-end and non-monetary items are translated
at historical exchange rates. Revenues and expenses are translated at the rates in effect on the
transaction dates or at the average rates of exchange for the reporting period. The resulting net
gain or loss is included in the consolidated statement of earnings.
(n) Stock option plan:
The Company has a Stock Option Plan which is described in Note 8 where options to purchase
Subordinate Voting Shares are issued to directors, officers and employees. Effective with the
commencement of its 2004 fiscal year, the Company accounts for stock-based compensation using
the fair-value method. The fair value of options granted are estimated at the date of grant using the
Black-Scholes Option Pricing Model and is recognized as an expense over the vesting period of
the stock option with an offsetting credit to contributed surplus. When stock options are
subsequently exercised, share capital is increased by the sum of the consideration paid together
with the related portion previously added to contributed surplus when compensation costs were
charged against income. The Company continues to use settlement accounting to account for
stock options granted prior to June 29, 2003.
(o) Restricted Share Units and Deferred Share Units:
The Company has restricted share unit (“RSU”) and deferred share unit (“DSU”) Plans, which
are described in Note 8. RSU and DSU Plans are settled in cash and are recorded as liabilities. The
measurement of the compensation expense and corresponding liability for these awards is based
on the fair value of the award, and is recorded as a charge to selling, general and administrative
(“SG&A”) expense over the vesting period of the award. At the end of each financial period,
changes in the Company’s payment obligation due to changes in the market value of the Subordinate
Voting Shares are recorded as a charge to SG&A expense. Dividend equivalent grants are recorded
as a charge to SG&A in the period the dividend is paid.
39
acquired or internally developed. The new standard is applicable to fiscal years beginning on or after October 1, 2008. The Company has evaluated the new section and currently does not expect the implementation
of this new section to have a significant impact on its consolidated financial statements.
International Financial Reporting Standards (“IFRS”)
The Canadian Accounting Standards Board has confirmed that the use of IFRS will be required for publicly accountable profit-oriented enterprises. IFRS will replace Canadian GAAP for those enterprises. These
new standards are applicable to fiscal years beginning on or after January 1, 2011 with comparative figures presented on the same basis. The Company is currently working on a conversion plan towards IFRS but it
is too early to assess the financial impact of the conversion at this point.
Note 6: Bank FacilitiesEffective June 27, 2008, the Company amended and renewed its credit agreement. The renewed credit
agreement provides for an operating facility for working capital and for general corporate purposes to a
maximum amount of $25 million, bearing interest at prime plus 0.75%. Standby fees of 0.50% are paid on
a quarterly basis on the unused portion of the facility. The operating facility is committed until June 29,
2009. The Company is required to comply with covenants regarding financial performance.
Security provided includes a security interest over all personal property of the Company’s business and
a mortgage over the land and building comprising the Company’s head office/distribution facility.
Subsequent to June 28, 2008, the Company also obtained an uncommitted letter of credit facility
(the “LC Facility”) in the amount of $10 million to be used exclusively for issuance of letters of
credit for the purchase of inventory and an uncommitted demand overdraft facility in the amount
of $0.5 million related thereto. Amounts outstanding under the overdraft facility bear interest at the
bank’s prime rate. The LC Facility is secured by the Company’s personal property from time to time
financed with the proceeds drawn thereunder.
Note 4: Inventories June 28, 2008 June 30, 2007
Raw materials $ 3,332 $ 2,389
Work-in-process 892 989
Finished goods 23,180 25,183
$ 27,404 $ 28,561
Note 5: Property and Equipment - June 28, 2008 - June 30, 2007 -
CostAccumulatedAmortization
Net Book Value Cost
AccumulatedAmortization
Net Book Value
Land $ 1,000 $ - $ 1,000 $ 1,000 $ - $ 1,000
Building 7,064 1,981 5,083 7,064 1,769 5,295
Leasehold improvements 24,315 15,861 8,454 24,013 14,980 9,033
Furniture and equipment 10,415 6,994 3,421 10,736 7,192 3,544
Computer hardware and software 4,014 1,876 2,138 7,578 4,613 2,965
Computer hardware and software under capital lease 2,920 1,704 1,216 2,920 1,182 1,738
- $ 49,728 $ 28,416 $ 21,312 $ 53,311 $ 29,736 $ 23,575
44
The following transactions occurred with respect to the RSU Plan:
Year Ended
June 28, 2008 June 30, 2007Outstanding at beginning of period 50,201 15,238Granted 123,300 40,000
Redeemed (38,534) -
Forfeited (1,667) (5,037)
Outstanding at end of period 133,300 50,201
Liability at the end of period $411 $234
Compensation expense recorded in SG&A $512 $220
Note 9: AmortizationAmortization included in cost of sales and SG&A is summarized as follows:
Year Ended
June 28, 2008 June 30, 2007Cost of sales $ 583 $ 509SG&A 5,571 6,074
- $ 6,154 $ 6,583
Note 10: Income TaxesFuture income tax asset (liability) is summarized as follows:
June 28, 2008 June 30, 2007Amortization $ 395 $ 18
Deferred lease inducements and rent liability 504 605
Capital lease obligation 276 611
Litigation provision and related expenses - 4,617
Stock based compensation 233 194
Other 158 (25)
$ 1,566 $ 6,020
Recorded in the consolidated balance sheets as follows:
June 28, 2008 June 30, 2007Future income tax asset – current portion $ 562 $ 5,112
Future income tax asset – long term portion 1,556 1,407
Future income tax liability – current portion (502) (444)
Future income tax liability – long term portion (50) (55)
Net future tax asset $ 1,566 $ 6,020