Income Taxes

12 Months Ended

Jan. 29, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 12

Income Taxes

The components of earnings from continuing operations before income taxes is comprised of the following:

	Fiscal Year
(In thousands)	2022		2021			2020
United States	$	130,517	$	(3,123	)	$	83,871
Foreign		22,474		(108,546	)		(1,436	)
Total Earnings (Loss) from Continuing Operations before Income Taxes	$	152,991	$	(111,669	)	$	82,435

Note 12

Income Taxes, Continued

Income tax expense from continuing operations is comprised of the following:

	Fiscal Year
(In thousands)	2022			2021			2020
Current
U.S. federal	$	49,354		$	(106,397	)	$	16,313
International		3,555			1,391			322
State		3,845			10,223			3,383
Total Current Income Tax Expense (Benefit)		56,754			(94,783	)		20,018
Deferred
U.S. federal		(22,542	)		48,511			(463	)
International		54			2,773			1,145
State		3,778			(12,142	)		(22	)
Total Deferred Income Tax Expense		(18,710	)		39,142			660
Total Income Tax Expense (Benefit) – Continuing Operations	$	38,044		$	(55,641	)	$	20,678

Reconciliation of the United States federal statutory rate to our effective tax rate from continuing operations is as follows:

	Fiscal Year
	2022			2021			2020
U. S. federal statutory rate of tax		21.00	%		21.00	%		21.00	%
State taxes (net of federal tax benefit)		3.94			1.35			3.62
Foreign rate differential		(0.11	)		(0.25	)		(2.21	)
Change in valuation allowance		1.58			(10.70	)		3.64
Credits		(0.55	)		0.44			(0.93	)
Permanent items		(0.05	)		(0.66	)		1.72
Uncertain federal, state and foreign tax positions		—			—			(2.01	)
CARES Act		—			41.53			—
Outside Basis Difference - IRC Section 165(g) 3		—			10.34			—
Goodwill Impairment		—			(13.50	)		—
Other		(0.94	)		0.28			0.25
Effective Tax Rate		24.87	%		49.83	%		25.08	%

Note 12

Income Taxes, Continued

We are subject to a tax on global intangible low-tax income (“GILTI”). GILTI taxes foreign income in excess of deemed return on tangible assets of a foreign corporation and we elected to treat this tax as a period cost. Because of tax losses in foreign jurisdictions, there was no liability for GILTI in any period.

Deferred tax assets and liabilities are comprised of the following:

(In thousands)	January 29, 2022			January 30, 2021
Pensions	$	553		$	229
Lease obligation		159,411			175,113
Book over tax depreciation		17,369			13,528
Expense accruals		11,965			10,388
Uniform capitalization costs		4,844			4,886
Provisions for discontinued operations and restructurings		596			650
Inventory valuation		394			2,242
Tax net operating loss and credit carryforwards		31,646			39,829
Allowances for bad debts and notes		863			888
Deferred compensation and restricted stock		2,736			2,945
Identified intangibles		1,409			1,586
Other		35			34
Gross deferred tax assets		231,821			252,318
Deferred tax asset valuation allowance		(42,195	)		(36,561	)
Deferred tax asset net of valuation allowance		189,626			215,757
Identified intangibles		(6,333	)		(4,677	)
Prepaids		(1,784	)		(1,765	)
Right of use asset		(150,554	)		(163,674	)
Tax over book depreciation		(30,421	)		(64,009	)
Other		(1,051	)		(1,120	)
Gross deferred tax liabilities		(190,143	)		(235,245	)
Net Deferred Tax Liabilities	$	(517	)	$	(19,488	)

We have an income tax receivable of $53.4 million included in prepaids and other current assets on the Consolidated Balance Sheets as of January 29, 2022.

The deferred tax balances have been classified in our Consolidated Balance Sheets as follows:

	As of Fiscal Year Ended
	2022			2021
Net non-current asset	$	1,466		$	-
Net non-current liability		(1,983	)		(19,488	)
Net Deferred Tax Assets	$	(517	)	$	(19,488	)

As of January 29, 2022 and January 30, 2021, we had state net operating loss carryforwards of $13.9 million and $22.4 million, respectively. We provided a valuation allowance against these attributes of $3.2 million as of both January 29, 2022 and January 30, 2021. The attributes expire in fiscal years 2023 through 2039.

As of January 29, 2022 and January 30, 2021, we had state tax credits of $0.5 million each year. These credits expire in fiscal years 2023 through 2026.

Note 12

Income Taxes, Continued

As of January 29, 2022 and January 30, 2021, we had foreign net operating loss carryforwards of $50.6 million and $57.6 million, respectively, which have a carryforward period at least 17 years.

As of January 29, 2022, we have provided a total valuation allowance of approximately $42.2 million on deferred tax assets associated primarily with foreign and state net operating losses for which management has determined it is more likely than not that the deferred tax assets will not be realized. The $5.6 million net increase in valuation allowance during Fiscal 2022 from the $36.6 million provided for as of January 30, 2021 relates primarily to foreign tax attributes. Management believes that it is more likely than not that the remaining deferred tax assets will be fully realized.

As of January 29, 2022, no deferred taxes have been provided on the accumulated undistributed earnings of our foreign operations beyond the amounts recorded for deemed repatriation of such earnings, as required in the Tax Cuts and Jobs Act (the "Act"). An actual repatriation of earnings from our foreign operations could still be subject to additional foreign withholding and U.S. state taxes. Based upon evaluation of our foreign operations, undistributed earnings are intended to remain permanently reinvested to finance anticipated future growth and expansion, and accordingly, deferred taxes have not been provided. If undistributed earnings of our foreign operations were not considered permanently reinvested as of January 29, 2022, an immaterial amount of additional deferred taxes would have been provided.

As of January 29, 2022, foreign tax credit carryforwards of approximately $4.1 million were available to reduce possible future U.S. income taxes and which expire from 2028 to 2031. As a result of the Act, we may no longer utilize certain U.S. foreign tax credit carryforwards. A valuation allowance of $3.9 million has been established against these credits.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits.

	Fiscal Year
(In thousands)	2022		2021		2020
Unrecognized Tax Benefit – Beginning of Period	$	178	$	178	$	1,835
Gross Increases (Decreases) – Tax Positions in a Current Period		—		—		178
Settlements		—		—		(931	)
Lapse of Statutes of Limitations		—		—		(904	)
Unrecognized Tax Benefit – End of Period	$	178	$	178	$	178

The amount of unrecognized tax benefits as of January 29, 2022, January 30, 2021 and February 1, 2020 which would impact the annual effective rate if recognized were $0.2 million each year. The amount of unrecognized tax benefits may change during the next twelve months but we do not believe the change, if any, will be material to our consolidated financial position or results of operations.

We recognize interest expense and penalties related to the above unrecognized tax benefits within income tax expense on the Consolidated Statements of Operations and it was not material for Fiscal 2022, 2021 or 2020.

We file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. With few exceptions, our state and local income tax returns for fiscal years ended January 31, 2019 and beyond remain subject to examination. In addition, we have subsidiaries in various foreign jurisdictions that have statutes of limitation generally ranging from two to six years. Our U.S. federal income tax returns for fiscal years ended January 31, 2019 and beyond remain subject to examination.