Income Taxes (Tables)

12 Months Ended

Feb. 02, 2019

Schedule of income tax expense (benefit)

Income tax expense (benefit) is summarized as follows (in thousands):



	Year Ended		Year Ended		Year Ended
	Feb 2, 2019		Feb 3, 2018		Jan 28, 2017
Federal:
Current	$	16,495	$	34,181	$	8,212
Deferred	4,543		21,595		(636		)
State:
Current	1,408		1,903		2,537
Deferred	1,532		217		(1,000		)
Foreign:
Current	3,385		7,333		17,055
Deferred	2,179		8,943		2,044
Total	$	29,542	$	74,172	$	28,212

Schedule of effective income tax rate reconciliation

Actual income tax expense differs from expected income tax expense obtained by applying the statutory federal income tax rate to earnings before income taxes as follows:



	Year Ended		Year Ended		Year Ended
	Feb 2, 2019		Feb 3, 2018		Jan 28, 2017
Computed “expected” tax rate	21.0	%	33.7	%	35.0	%
State taxes, net of federal benefit	1.1	%	2.4	%	1.9	%
Non-U.S. tax expense higher (lower) than federal statutory tax rate¹	24.2	%	(10.5	%)	(2.9	%)
Tax Reform - repatriation tax adjustment^2,5	(41.8	%)	32.8	%	—	%
Tax Reform - deferred tax adjustment	—	%	35.4	%	—	%
Cumulative valuation reserve³	—	%	—	%	12.7	%
Valuation reserve⁴	0.5	%	12.9	%	10.9	%
Unrecognized tax liabilities (benefits)⁵	51.3	%	0.8	%	1.0	%
Share-based compensation⁶	0.2	%	1.5	%	—	%
Net tax settlements	—	%	—	%	3.5	%
Sale of minority interest investment	—	%	—	%	(4.3	%)
Estimated exit tax charge	—	%	—	%	3.5	%
Prior year tax adjustments	0.3	%	0.7	%	(4.4	%)
Non-deductible permanent differences	16.5	%	(4.1	%)	(4.3	%)
Foreign derived intangible income	(10.2	%)	—	%	—	%
Other	0.1	%	—	%	—	%
Effective tax rate	63.2	%	105.6	%	52.6	%

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The jurisdictional location of pre-tax income (loss) may represent a significant component of the Company’s effective tax rate as income tax rates outside the U.S. are generally lower than the U.S. statutory income tax rate. Furthermore, the impact of changes in the jurisdictional location of pre-tax income (loss) on the Company’s effective tax rate will be greater at lower levels of consolidated pre-tax income (loss). These amounts exclude the impact of net changes in valuation allowances, audit and other adjustments related to the Company’s non-U.S. operations, as they are reported separately in the appropriate corresponding line items in the table above. The impact on the Company’s effective tax rate was primarily due to lower U.S. taxes resulting from the Tax Reform and the mix of earnings in foreign jurisdictions.

During fiscal 2018, the Company recognized additional tax expense resulting from the enactment of the Tax Reform to account for the estimated effects of the transitional tax on the deemed repatriation of foreign earnings and reduced deferred tax assets due to lower future U.S. corporate tax rates. During the third quarter of fiscal 2019, the Company completed the preparation of its U.S. federal tax return for fiscal 2018 and concluded, based on the additional information that had become available, that no transition tax was due with respect to the Tax Reform. As a result, during the third quarter of fiscal 2019, the Company reversed a portion of provisional amounts initially recorded during the three months ended February 3, 2018 and recorded a benefit of $19.6 million.


³	Amounts represent valuation reserves resulting from jurisdictions where there have been cumulative net operating losses, limiting the Company’s ability to consider other subjective evidence to continue to recognize the existing deferred tax assets.


⁴	Amounts relate primarily to valuation reserves on non-cumulative net operating losses or other deferred tax assets arising during the respective period.

⁵

During the fourth quarter of fiscal 2019, the Company concluded based on additional regulatory guidance issued during the quarter related to the Tax Reform, that the Company would owe transition taxes if proposed legislation that clarifies existing tax regulation with respect to the dividends received deduction calculation is passed into law. As a result, during the three months ended February 2, 2019, the Company recorded additional charges due to the Tax Reform of $25.8 million as an uncertain tax position.

⁶

During fiscal 2018, the Company adopted authoritative guidance which requires all income tax effects of stock awards (resulting from an increase or decrease in the fair value of an award from grant date to the vesting date) to be recognized in the income statement when the awards vest or are settled. This is a change from previous guidance that required such activity to be recorded in paid-in capital within stockholders’ equity.

Schedule of total income tax expense (benefit) allocation

Total income tax expense (benefit) is allocated as follows (in thousands):



	Year Ended		Year Ended			Year Ended
	Feb 2, 2019		Feb 3, 2018			Jan 28, 2017
Operations ¹	$	29,542	$	74,172		$	28,212
Stockholders’ equity ¹	3,006		(3,173		)	1,782
Total income tax expense	$	32,548	$	70,999		$	29,994

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Schedule of tax effects of components of other comprehensive income (loss)

The tax effects of the components of other comprehensive income (loss) are allocated as follows (in thousands):



	Year Ended		Year Ended			Year Ended
	Feb 2, 2019		Feb 3, 2018			Jan 28, 2017
Derivative financial instruments designated as cash flow hedges	$	2,402	$	(2,738	)	$	(864	)
Marketable securities	—		—			6
Defined benefit plans	604		(435		)	(21		)
Total income tax expense (benefit) ¹	$	3,006	$	(3,173	)	$	(879	)

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During the fourth quarter of fiscal 2018, the Company early adopted authoritative guidance which addresses certain stranded income tax effects in accumulated other comprehensive loss resulting from the Tax Reform enacted in December 2017. As a result, the Company recorded a cumulative adjustment to increase retained earnings by $1.2 million with a corresponding reduction to accumulated other comprehensive loss related to the Company’s Supplemental Executive Retirement Plan and its interest rate swap designated as a cash flow hedge based in the U.S. The impact from this reclassification on accumulated other comprehensive income (loss) has been excluded from the amounts provided in this table.

Schedule of total earnings before income tax expense and noncontrolling interest

Total earnings before income tax expense and noncontrolling interests are comprised of the following (in thousands):



	Year Ended			Year Ended		Year Ended
	Feb 2, 2019			Feb 3, 2018		Jan 28, 2017
Domestic operations	$	97,885		$	39,112	$	32,944
Foreign operations	(51,177		)	31,159		20,666
Earnings before income tax expense and noncontrolling interests	$	46,708		$	70,271	$	53,610

Schedule of tax effects of temporary differences

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of February 2, 2019 and February 3, 2018 are presented below (in thousands):



	Feb 2, 2019			Feb 3, 2018
Deferred tax assets:
Net operating losses	$	23,212		$	19,859
Defined benefit plans	12,883			13,155
Deferred compensation	9,823			10,721
Rent expense	7,114			7,651
Fixed asset basis	6,638			10,704
Deferred income	4,373			7,141
Accrued bonus	2,208			251
Account receivable/return reserve	2,009			1,926
Bad debt reserve	1,933			2,529
Uniform capitalization	1,419			974
Inventory valuation	1,339			3,005
Lease incentives	1,337			1,814
Other	18,883			25,521
Total deferred tax assets	93,171			105,251
Deferred tax liabilities:
Goodwill amortization	(2,267		)	(2,303		)
Excess of tax over book depreciation/amortization	(101		)	(135		)
Other	(769		)	(4,517		)
Valuation allowance	(32,810		)	(32,601		)
Net deferred tax assets ¹	$	57,224		$	65,695

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¹	As of February 2, 2019, there were no amounts included for net deferred tax liabilities recorded in other long-term liabilities in the Company’s consolidated balance sheet. There were $2.7 million net deferred tax liabilities recorded in other long-term liabilities in the Company’s consolidated balance sheet at February 3, 2018.

Schedule of reconciliation of unrecognized tax benefit

A reconciliation of the beginning and ending amount of gross unrecognized tax benefit (excluding interest and penalties) is as follows (in thousands):



	Year Ended			Year Ended			Year Ended
	Feb 2, 2019			Feb 3, 2018			Jan 28, 2017
Beginning balance	$	16,771		$	12,983		$	12,585
Additions:
Tax positions related to the prior year	25,822			3,129			667
Tax positions related to the current year	267			222			106
Reductions:
Tax positions related to the prior year	(2,934		)	(355		)	(286		)
Tax positions related to the current year	(449		)	(303		)	—
Settlements	—			—			—
Expiration of statutes of limitations	—			(206		)	—
Foreign currency translation	(726		)	1,301			(89		)
Ending balance	$	38,751		$	16,771		$	12,983