Income Taxes

9 Months Ended

Oct. 30, 2021

Income Taxes

Income Taxes

5.    Income Taxes: Our effective income tax rate for the Third Quarter of Fiscal 2021 was an expense of 14.5% while our effective income tax rate for the Third Quarter of Fiscal 2020 was a benefit of 24.6%. Our effective income tax rate for the First Nine Months of Fiscal 2021 was an expense of 20.3% while our effective income tax rate for the First Nine Months of Fiscal 2020 was a benefit of 23.3%.

The income tax expense in the First Nine Months of Fiscal 2021 includes the benefit of a $2 million net reduction in uncertain tax positions resulting from the settlement of those uncertain tax position amounts in the First Quarter of Fiscal 2021, the utilization of benefits associated with certain capital losses to substantially offset a gain recognized on the sale of an unconsolidated entity in the Third Quarter of Fiscal 2021 and other favorable items. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income

tax purposes. The net impact of these items results in a much lower effective tax rate than a more typical 25% annual effective tax rate.

The income tax benefit in the First Nine Months of Fiscal 2020 includes the benefit of the operating losses that were realized at a rate of 35% pursuant to the CARES Act provision allowing the carryback of Fiscal 2020 loss amounts to pre-U.S. Tax Reform years, offset by (1) the non-deductibility of certain goodwill impairment charges which resulted in an estimated effective tax rate of 17% on the impairment charges, and (2) the impact of restricted stock awards vesting at a price lower than the grant date value.

After recognizing a $2 million net reduction in uncertain tax positions during the First Nine Months of Fiscal 2021, the unrecognized tax benefits of uncertain tax positions as of October 30, 2021 was $3 million. The total amount of uncertain tax benefits relating to our tax positions is subject to change based on future events including, but not limited to, settlements of ongoing audits and assessments and the expiration of applicable statutes of limitation. We expect that the balance of unrecognized tax benefits may decrease by an additional $1 million during the next 12 months. However, changes in the expected occurrence, outcomes and timing of such events could cause our current estimate to change in the future.