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Note 16 - Income Taxes

3 Months Ended

May 02, 2020

Note 16

Income Taxes

The Company’s consolidated effective tax rates were 19.9% and 25.2% for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively. During the thirteen weeks ended May 2, 2020, the Company's effective tax rate was impacted by several discrete tax items, including the non-deductibility of a portion of the Company's intangible asset impairment charges, the provision of a valuation allowance related to net deferred tax assets of its Canadian business division and the incremental tax provision related to share-based compensation during the first quarter of 2020. During the thirteen weeks ended May 4, 2019, the Company's effective tax rate was impacted by a discrete tax provision of $0.1 million related to share-based compensation. If these discrete taxes had not been recognized during the thirteen weeks ended May 2, 2020 and May 4, 2019, the Company's effective tax rates would have been 26.6% and 24.3%, respectively.

As of May 2, 2020, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, as required by the Tax Cuts and Jobs Act. The Company periodically evaluates its foreign investment opportunities and plans, as well as its foreign working capital needs, to determine the level of investment required and, accordingly, determines the level of foreign earnings that is considered indefinitely reinvested. Based upon that evaluation, earnings of the Company’s foreign subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted foreign earnings.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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