Income Taxes

9 Months Ended

Oct. 29, 2011

Income Taxes

Income Taxes

(6)           Income Taxes

Income tax expense for the interim periods was computed using the effective tax rate estimated to be applicable for the full fiscal year, along with the impact of any discrete items.  The Company’s effective income tax rate increased to 33.0% for the nine months ended October 29, 2011 from 30.0% for the nine months ended October 30, 2010. The effective income tax rate for the nine months ended October 29, 2011, includes the discrete impact of a $19.5 million settlement charge recorded in the second quarter of fiscal 2012 (see Note 11). This unfavorably impacted the mix of taxable income among the Company’s tax jurisdictions, resulting in an increase in the effective income tax rate for the nine months ended October 29, 2011 of 170 basis points.  The effective income tax rate for the nine months ended October 29, 2011 also increased over the nine months ended October 30, 2010 as a result of the effect of currencies on the Company’s projected tax liabilities and a larger estimated mix of taxable income in higher tax jurisdictions compared to the prior year.

From time to time, the Company is subject to routine compliance reviews on various tax matters around the world in the ordinary course of business.  As of October 29, 2011, several income tax audits were underway for various periods in multiple jurisdictions. As required under applicable accounting rules, the Company accrues an amount for its estimate of additional income tax liability which the Company, more likely than not, could incur as a result of the ultimate resolution of the audits (“uncertain tax positions”). The Company reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, upon completion of tax audits, upon expiration of statutes of limitation, or upon occurrence of other events.

As of October 29, 2011 and January 29, 2011, the Company had $17.7 million and $17.0 million, respectively, of aggregate accruals for uncertain tax positions, including penalties and interest and net of federal tax benefits. The change in the accrual balance from January 29, 2011 to October 29, 2011 resulted from foreign currency translation and interest.