

Note 15	Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law, making significant changes to the U.S. Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21%, the transition of U.S. international taxation from a worldwide tax system to a quasi-territorial tax system and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. The provisional income tax benefit recorded in fiscal 2017 of $0.3 million was comprised of a $24.6 million deferred tax benefit for the remeasurement of deferred tax assets and liabilities to the 21% rate at which they are expected to reverse, partially offset by a one-time tax expense on deemed repatriation of $22.9 million and $1.4 million deferred tax expense in connection with Internal Revenue Code section 162(m) and other provisions in the Act. These provisional amounts continue to represent the Company's best estimate based on current information and guidance as of November 3, 2018. As permitted by SEC Staff Accounting Bulletin 118 (“SAB 118”), the Company will continue to analyze all provisional amounts associated with the Act as a result of pending issuance of Notices and Regulations related to the Act. Any subsequent adjustment to these amounts will be recorded to the Company's income tax provision during the fourth quarter of 2018 when the analysis is complete.

The Act also includes the Global Intangibles Low-Taxed Income ("GILTI") provision, a new minimum tax on global intangible low-taxed income, the Base Erosion Anti-Avoidance ("BEAT") provision, a new tax for certain payments to foreign related parties, and the Foreign-Derived Intangible Income ("FDII") provision, a tax incentive to earn income from the sale, lease or license of goods and services abroad. The Company is permitted to make an accounting policy election to account for GILTI as either a period charge in the future period the tax arises or as part of deferred taxes related to the investment or subsidiary. As a result of the complexity of the GILTI provisions, the Company is still evaluating the provisions on future periods and has not yet elected an accounting policy related to its treatment of these future tax liabilities. For the thirteen and thirty-nine weeks ended November 3, 2018, the Company has recorded provisional amounts for GILTI as a period charge in the income tax provision. The Company is also still evaluating the BEAT and FDII provisions of the Act.

The Company’s consolidated effective tax rates were 24.5% and 29.6% for the thirteen weeks ended November 3, 2018 and October 28, 2017, respectively. During the thirteen weeks ended October 28, 2017, the Company recognized discrete tax benefits of $0.9 million, reflecting greater deductibility of certain 2016 expenses than originally estimated. If these discrete tax benefits had not been recognized during the thirteen weeks ended October 28, 2017, the Company's effective tax rate would have been 31.5%.

For the thirty-nine weeks ended November 3, 2018 and October 28, 2017, the Company's consolidated effective tax rates were 24.5% and 30.6%, respectively. During the thirty-nine weeks ended November 3, 2018, the Company recognized discrete tax benefits of $0.7 million, reflecting greater deductibility of certain 2017 expenses than originally estimated and share-based compensation. During the thirty-nine weeks ended October 28, 2017, the Company recognized $2.0 million of discrete tax benefits, primarily related to share-based compensation. If these discrete tax benefits had not been recognized during the thirty-nine weeks ended November 3, 2018 and October 28, 2017, the Company's effective tax rates would have been 25.4% and 32.7%, respectively. The Company's tax rate is lower for the thirteen and thirty-nine weeks ended November 3, 2018, reflecting a reduction in the U.S. corporate tax rate following enactment of the Act.