Income Taxes (Tables)

12 Months Ended

Feb. 01, 2020

Income Tax Disclosure [Abstract]

Schedule of income tax expense (benefit)

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

	Year Ended			Year Ended		Year Ended
	Feb 1, 2020			Feb 2, 2019		Feb 3, 2018
Federal:
Current	$	9,270		$	16,495	$	34,181
Deferred	2,263			4,543		21,595
State:
Current	1,622			1,408		1,903
Deferred	1,699			1,532		217
Foreign:
Current	17,166			3,385		7,333
Deferred	(9,507		)	2,179		8,943
Total	$	22,513		$	29,542	$	74,172

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 1, 2020		Feb 2, 2019		Feb 3, 2018
Computed “expected” tax rate	21.0	%	21.0	%	33.7	%
State taxes, net of federal benefit	3.0	%	1.1	%	2.4	%
Non-U.S. tax expense higher (lower) than federal statutory tax rate1	0.0	%	24.2	%	(10.5	%)
Tax Reform - repatriation tax adjustment2,3	—	%	(41.8	%)	32.8	%
Tax Reform - deferred tax adjustment	—	%	—	%	35.4	%
Swiss tax reform4	(6.5	%)	—	%	—	%
Valuation reserve	(0.2	%)	0.5	%	12.9	%
Unrecognized tax liabilities (benefits)3	(6.2	%)	51.3	%	0.8	%
Share-based compensation	0.9	%	0.2	%	1.5	%
Net tax settlements	9.1	%	—	%	—	%
Prior year tax adjustments	(1.8	%)	0.3	%	0.7	%
Non-deductible permanent differences	0.6	%	16.5	%	(4.1	%)
Foreign derived intangible income	(3.4	%)	(10.2	%)	—	%
Other	1.7	%	0.1	%	—	%
Effective tax rate	18.2	%	63.2	%	105.6	%

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¹  The jurisdictional location of pre-tax income (loss) may represent a significant component of the Company’s effective tax rate as earnings (loss) in foreign jurisdictions are taxed at rates that are different from 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.

²  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  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. In fiscal 2020, the Company revised its tax liability estimation and related accrual to $19.9 million.

⁴ 

During fiscal 2020, the Company recognized additional tax benefits resulting from the enactment of the Swiss tax reform. The additional tax benefits related primarily to the recognition of a deferred tax asset associated with the estimated value of a tax basis step-up of the Company’s Switzerland subsidiary’s assets.

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 1, 2020			Feb 2, 2019		Feb 3, 2018
Operations	$	22,513		29,542		$	74,172
Stockholders’ equity1	(1,142		)	3,006		(3,173		)
Total income tax expense	$	21,371		$	32,548	$	70,999

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¹ 

In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the “Notes”) in a private offering. Paid-in capital includes $1.3 million in net deferred tax assets in connection with the related convertible note hedge transactions and debt discount associated with the Notes. Refer to Note 10 for more information on the convertible senior notes and related transactions.

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 1, 2020		Feb 2, 2019		Feb 3, 2018
Derivative financial instruments designated as cash flow hedges	$	80	$	2,402	$	(2,738	)
Defined benefit plans	68		604		(435		)
Total income tax expense (benefit)1	$	148	$	3,006	$	(3,173	)

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¹ 

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 1, 2020		Feb 2, 2019			Feb 3, 2018
Domestic operations	$	91,008	$	97,885		$	39,112
Foreign operations	32,734		(51,177		)	31,159
Earnings before income tax expense and noncontrolling interests	$	123,742	$	46,708		$	70,271

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 1, 2020 and February 2, 2019 are presented below (in thousands):

	Feb 1, 2020			Feb 2, 2019
Deferred tax assets:
Operating lease liabilities	$	187,981		$	—
Net operating losses	24,156			23,212
Defined benefit plans	12,539			12,883
Convertible senior notes hedge transactions	12,284			—
Deferred compensation	9,282			9,823
Goodwill amortization	7,301			—
Deferred income	5,568			4,373
Inventory valuation	3,378			1,339
Lease incentives	3,272			1,337
Account receivable reserve	2,043			2,009
Accrued bonus	1,993			2,208
Sales return and other reserves	1,981			1,933
Uniform capitalization	890			1,419
Rent expense	—			7,114
Excess of book over tax depreciation/amortization	—			6,638
Other	14,296			18,883
Total deferred tax assets	286,964			93,171
Deferred tax liabilities:
Operating right-of-use assets	(175,370		)	—
Convertible senior notes debt discount	(11,167		)	—
Goodwill amortization	—			(2,267		)
Other	(6,112		)	(870		)
Valuation allowance	(30,760		)	(32,810		)
Net deferred tax assets	$	63,555		$	57,224

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 1, 2020			Feb 2, 2019			Feb 3, 2018
Beginning balance	$	38,751		$	16,771		$	12,983
Additions:
Tax positions related to the prior year	3,074			25,822			3,129
Tax positions related to the current year	264			267			222
Reductions:
Tax positions related to the prior year	(12,658		)	(2,934		)	(355		)
Tax positions related to the current year	—			(449		)	(303		)
Expiration of statutes of limitations	—			—			(206		)
Foreign currency translation	(248		)	(726		)	1,301
Ending balance	$	29,183		$	38,751		$	16,771