XML 35 R19.htm IDEA: XBRL DOCUMENT v3.24.1
INCOME TAXES
 12 Months Ended
Feb. 04, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of income (loss) before income taxes were as follows:
(In millions)202320222021
Domestic$90.9 $(404.9)$(120.3)
Foreign750.1 793.1 1,093.0 
Total$841.0 $388.2 $972.7 
    
The income before income taxes in 2022 includes a $417.1 million noncash goodwill impairment recorded in conjunction with the Company’s annual goodwill impairment testing.

Taxes paid were $209.8 million, $254.5 million and $155.4 million in 2023, 2022 and 2021, respectively.

The provision (benefit) for income taxes attributable to income consisted of the following:
(In millions)202320222021
Federal:   
   Current$0.1 $(6.9)$(87.7)
   Deferred(18.2)(5.1)(51.4)(1)
State and local:   
   Current5.3 (6.2)19.6 
   Deferred0.2 0.8 (21.7)
Foreign:   
   Current186.4 191.1 153.7 
   Deferred3.6 14.1 8.2 (2)
Total$177.4 $187.8 $20.7 

(1)     Includes a $106.3 million benefit related to a tax accounting method change made in conjunction with the Company’s 2020 U.S. federal income tax return that provides additional tax benefits to the foreign components of the federal income tax provision.

(2)     Includes a $32.3 million benefit related to the remeasurement of certain net deferred tax assets in connection with the expiration of the special tax rates at the end of 2021.

The provision (benefit) for income taxes for the years 2023, 2022 and 2021 was different from the amount computed by applying the statutory United States federal income tax rate to the underlying income as follows:
 202320222021
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal income tax benefit0.8 %1.1 %(0.1)%
Effects of international jurisdictions, including foreign tax credits1.9 %1.6 %(8.0)%
Change in estimates for uncertain tax positions(1.6)%(2.2)%(9.7)%
Change in valuation allowance0.3 %1.2 %0.7 %
Tax accounting method change— %— %(10.9)%
Tax on foreign earnings (GILTI and FDII)(1.9)%1.2 %7.6 %
Goodwill impairment— %22.3 %— %
Excess tax expense related to stock-based compensation0.1 %0.5 %— %
Other, net0.5 %1.7 %1.5 %
Effective income tax rate21.1 %48.4 %2.1 %

The Company files income tax returns in more than 40 international jurisdictions each year. A substantial amount of the Company’s earnings are in international jurisdictions, particularly the Netherlands and Hong Kong SAR, where income tax rates, when coupled with special rates levied on income from certain of the Company’s jurisdictional activities, have historically been lower than the United States statutory income tax rate. The benefit of special rates, which expired at the end of 2021, are reflected above in Effects of international jurisdictions, including foreign tax credits.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act, with tax provisions primarily focused on implementing a 15% corporate minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases. The corporate minimum tax became effective in fiscal 2023 and the excise tax was effective January 1, 2023. The corporate minimum tax did not have any impact on our consolidated financial statements. Please see Note 14, “Stockholders’ Equity” for further discussion of share repurchases and the excise taxes incurred in 2023.
The Organization for Economic Cooperation and Development has proposed a global minimum effective tax rate of 15%, generally known as Pillar Two, which would be effective in fiscal 2024 for certain multinational companies. Under Pillar Two, a top-up tax would be required for any jurisdiction whose effective tax rate falls below the 15% minimum rate. The Company is closely monitoring developments and evaluating the impacts these new rules will have on its tax rate. Based on the Company’s preliminary analysis, the Pillar Two legislation is not expected to have a material impact on its consolidated financial statements.

The components of deferred income tax assets and liabilities were as follows:
(In millions)20232022
Gross deferred tax assets
   Tax loss and credit carryforwards$152.0 $143.6 
   Operating lease liabilities352.4 378.9 
   Employee compensation and benefits60.2 59.9 
   Inventories41.5 44.6 
   Accounts receivable9.2 12.9 
   Accrued expenses12.6 15.4 
Property, plant and equipment243.5 242.3 
   Other, net 5.4 17.2 
      Subtotal876.8 914.8 
   Valuation allowances(73.7)(72.9)
Total gross deferred tax assets, net of valuation allowances$803.1 $841.9 
Gross deferred tax liabilities
   Intangibles$(772.2)$(807.1)
   Operating lease right-of-use assets(322.1)(340.0)
   Derivative financial instruments(21.1)(18.5)
Total gross deferred tax liabilities$(1,115.4)$(1,165.6)
Net deferred tax liability$(312.3)$(323.7)

At the end of 2023, the Company had on a tax-effected basis approximately $174.7 million of net operating loss and tax credit carryforwards available to offset future taxable income in various jurisdictions. The carryforwards expire principally between 2024 and 2043.

The Company’s intent is to reinvest indefinitely substantially all of its historical earnings in foreign subsidiaries outside of the United States in jurisdictions in which we would expect to incur material tax costs upon distribution of such amounts. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.
    
Uncertain tax positions activity for each of the last three years was as follows:
(In millions)202320222021
Balance at beginning of year$114.7 $127.8 $210.7 
Increases related to prior year tax positions0.6 12.4 2.6 
Decreases related to prior year tax positions(11.0)(12.3)(0.2)
Increases related to current year tax positions2.9 2.7 15.5 
Lapses in statute of limitations(6.4)(12.0)(93.3)
Effects of foreign currency translation(1.2)(3.9)(7.5)
Balance at end of year$99.6 $114.7 $127.8 
    
The entire amount of uncertain tax positions as of February 4, 2024, if recognized, would reduce the future effective tax rate under current accounting guidance.

Interest and penalties related to uncertain tax positions are recorded in the Company’s income tax provision. Interest and penalties recognized in the Company’s Consolidated Statements of Operations for 2023, 2022 and 2021 totaled an expense of
$1.3 million, an expense of $0.9 million and a benefit of $7.4 million, respectively. Interest and penalties accrued in the Company’s Consolidated Balance Sheets as of February 4, 2024 and January 29, 2023 totaled $21.2 million and $20.1 million, respectively. The Company recorded its liabilities for uncertain tax positions principally in accrued expenses and other liabilities in its Consolidated Balance Sheets.

The Company files income tax returns in the United States and in various foreign, state and local jurisdictions. Most examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through 2006. It is reasonably possible that a reduction of uncertain tax positions of up to $53.0 million may occur within the next 12 months.