XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
9 Months Ended
Nov. 03, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes:
Provision for income taxes as a percentage of income before income taxes was 30.7% and 21.5% for the three and nine months ended November 3, 2017, respectively, and 28.3% and 33.6% for the three and nine months ended November 4, 2016, respectively. The tax rate was higher for the three months ended November 3, 2017 compared to the prior year period due to lower research and development credits, partially offset by $2 million in excess tax benefits. The tax rate was lower for the nine months ended November 3, 2017 compared to the same period in the prior year primarily due to $22 million in excess tax benefits recognized for the nine months ended November 3, 2017. The excess tax benefits are related to employee share-based compensation as a result of the adoption of ASU 2016-9, Improvements to Employee Share-Based Payment Accounting, see “Accounting Standards Updates” in Note 1. Tax rates for the periods ended November 3, 2017 were lower than the combined federal and state statutory rates due to excess tax benefits related to employee share-based compensation and due to permanent tax benefits, including research and development credits and the manufacturer’s tax deduction.
As of November 3, 2017, the balance of unrecognized tax benefits included liabilities for uncertainty in income taxes of $6 million; $5 million of which is classified as other long-term liabilities on the condensed and consolidated balance sheets and $1 million of which is classified as a reduction to the corresponding deferred tax asset and is presented in other assets on the condensed and consolidated balance sheets. $6 million of unrecognized tax benefits, if recognized, would affect the effective income tax rate for the Company. While the Company believes it has adequate accruals for uncertainty in income taxes, the tax authorities, on review of the Company’s tax filings, may determine that the Company owes taxes in excess of recorded accruals, or the recorded accruals may be in excess of the final settlement amounts agreed to by tax authorities. Although the timing of such reviews is not certain, we do not believe that it is reasonably possible that the unrecognized tax benefits will materially change in the next 12 months.