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Income Taxes
 12 Months Ended
Jan. 28, 2012
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES

Income/(loss) before income taxes:
 
Year Ended
(In thousands)
January 28, 2012
 
January 29, 2011
 
January 30, 2010
Domestic                                                                                   
$
(945
)
 
$
(60,698
)
 
$
(97,355
)
Foreign                                                                                   
5,971

 
3,842

 
5,821

 
$
5,026

 
$
(56,856
)
 
$
(91,534
)


Income tax provision/(benefit):
 
Year Ended
(In thousands)
January 28, 2012
 
January 29, 2011
 
January 30, 2010
Current:
 
 
 
 
 
Federal                                                                          
$
(1,010
)
 
$
(5,094
)
 
$
(24,183
)
State                                                                          
4,219

 
291

 
5,791

Foreign                                                                          
191

 
371

 
836

 
3,400

 
(4,432
)
 
(17,556
)
Deferred:
 

 
 

 
 

Federal                                                                          
3,263

 
1,206

 
3,106

State                                                                          
380

 
352

 
878

 
3,643

 
1,558

 
3,984

 
$
7,043

 
$
(2,874
)
 
$
(13,572
)

Net income tax payments/(refunds) were as follows:
 
Year Ended
(In thousands)
January 28, 2012
 
January 29, 2011
 
January 30, 2010
Net payments/(refunds)                                                                        
$
1,090

 
$
(40,034
)
 
$
(21,566
)


Reconciliation of the statutory Federal income tax rate to the effective tax rate:
 
Year Ended
 
 
January 28, 2012(1)
 
January 29, 2011
 
January 30, 2010
 
Statutory Federal income tax rate                                                                          
35.0
 %
 
(35.0
)%
 
(35.0
)%
 
State income tax, net of Federal income tax                                                                          
50.2

 
(2.0
)
 
2.0

 
Foreign income                                                                          
(37.8
)
 
(1.7
)
 
(1.3
)
 
Employee benefits                                                                          
(14.4
)
 
(1.7
)
 
(0.9
)
 
Valuation allowance                                                                          
156.1

 
41.0

 
14.7

 
Other, net                                                                          
(49.0
)
 
(5.7
)
(2) 
5.7

(3) 
Effective tax rate                                                                          
140.1
 %
 
(5.1
)%
 
(14.8
)%
 
(1)
Percentages are based on a low pre-tax income and are not necessarily comparable to other fiscal years.
(2)
Relates primarily to reductions in Federal interest and penalties during the year in conjunction with the filing of tax accounting method changes.
(3)
Relates primarily to Federal interest and penalties recognized during the year.

Components of deferred tax assets and liabilities:
(In thousands)
January 28, 2012
 
January 29, 2011
Deferred tax assets
 
 
 
Tax credit and net operating loss carryforwards                                                                                        
$
66,559

 
$
52,091

Accounts receivable                                                                                        
1,991

 
1,983

Inventories                                                                                        
3,249

 
3,056

Prepaid and accrued expenses                                                                                        
6,016

 
5,623

Deferred compensation                                                                                        
8,515

 
9,454

Property, equipment, and leasehold improvements                                                                                        
26,768

 
27,677

Accrued restructuring expense                                                                                        
3,847

 
4,240

Other                                                                                        
10,687

 
11,147

Total deferred tax assets                                                                                  
127,632

 
115,271

 
 
 
 
Deferred tax liabilities
 

 
 

Goodwill and intangible assets                                                                                        
(54,243
)
 
(50,521
)
Deferred rent and allowances                                                                                 
(20,514
)
 
(15,558
)
Total deferred tax liabilities                                                                                  
(74,757
)
 
(66,079
)
 
 
 
 
Valuation allowance                                                                                        
(104,831
)
 
(97,505
)
Net deferred tax liability                                                                                        
$
(51,956
)
 
$
(48,313
)

The net deferred tax liability is presented on the consolidated balance sheet as follows:
(In thousands)
January 28, 2012
 
January 29, 2011
Current deferred tax asset                                                                                        
$
3,570

 
$
3,153

Long-term deferred tax liability                                                                                        
(55,526
)
 
(51,466
)


The following income tax receivables, net, which primarily include amended return receivables as of January 28, 2012; and amended return receivables and the net operating loss (“NOL”) carryback for Fiscal 2009 as of January 29, 2011, are included in “Prepayments and other” on our consolidated balance sheets:
(In thousands)
January 28,
2012
 
January 29,
2011
Income taxes receivable, net
$
10,048

 
$
10,733



We continue to have a valuation allowance established against our net deferred tax assets.  Accordingly, during Fiscal 2011 and Fiscal 2010 we increased our valuation allowance and recognized a non-cash provision of $7,846,000 and $23,327,000, respectively. During Fiscal 2009 we increased our valuation allowance and recognized a non-cash provision of $13,481,000, net of a $29,461,000 benefit resulting from the carryback of our remaining Fiscal 2008 NOLs.  On November 6, 2009, the “Worker, Homeownership, and Business Assistance Act of 2009” (the “Act”) was signed into law. This Act contained a number of tax law changes, including a provision that permits companies to carry back applicable 2008 or 2009 NOLs up to five years, instead of the general two-year carryback.  We recognized the tax effects of the Act, including the re-measurement of existing current and deferred tax assets and liabilities, as well as related valuation allowances, in the interim period that included the enactment date of the change.  Accordingly, during the Fiscal 2009 Fourth Quarter we reclassified our Fiscal 2008 NOL carryforward from deferred tax assets to income tax receivable, reduced the valuation allowance previously established for these NOLs, and recognized an income tax benefit.

In future periods we will continue to recognize a valuation allowance until such time as the certainty of future tax benefits can be reasonably assured.  When our results demonstrate a pattern of future profitability the valuation allowance may be adjusted, which would result in the reinstatement of all or a part of the net deferred tax assets.

As of January 28, 2012 we have U.S. Federal net operating loss carryforwards of $142,208,000 and state net operating loss carryforwards of $103,907,000 that are available to offset future U.S. Federal and state taxable income.  The majority of the U.S. Federal net operating losses have a twenty-year carryforward period, and expire between Fiscal 2029 and Fiscal 2031.  The state net operating losses have carryforward periods of five to twenty years, with varying expiration dates and amounts as follows:  $14,763,000 in one to five years, $19,238,000 in six to ten years, $18,485,000 in eleven to fifteen years, and $51,421,000 in sixteen to twenty years.  There are other state net operating losses not included in the above amounts that have not been valued as a result of our certainty that they will not be realized in the future.

Reconciliation of the change in our liability for unrecognized tax benefits:
 
Year Ended
(In thousands)
January 28, 2012
 
January 29, 2011
 
January 30, 2010
Gross unrecognized tax benefits, beginning of year
$
28,793

 
$
29,773

 
$
29,179

Additions/(reductions) for tax positions related to prior years
465

 
(1,387
)
 
4,140

Additions for tax positions related to current year
1,194

 
1,234

 
183

Reductions resulting from lapse of applicable statute of limitations
—

 
(696
)
 
(287
)
Settlements
(1,127
)
 
(131
)
 
(3,442
)
Gross unrecognized tax benefits, end of year
$
29,325

 
$
28,793

 
$
29,773



The portion of the liability for gross unrecognized tax benefits that, if recognized, would decrease our provision for income taxes and increase our net income was $19,180,000 as of January 28, 2012 and $19,055,000 as of January 29, 2011.
 
A substantial portion of the “Other” deferred tax assets included in the components of deferred tax assets and liabilities above represents deferred tax assets related to unrecognized tax benefits.

Reconciliation of accrued interest and penalties:
 
Year Ended
(In thousands)
January 28, 2012
 
January 29, 2011
 
January 30, 2010
Accrued interest and penalties, beginning of year
$
14,755

 
$
18,071

 
$
12,731

Interest and penalties recognized during year
1,285

 
(3,316
)
 
5,340

Accrued interest and penalties, end of year
$
16,040

 
$
14,755

 
$
18,071



The interest and penalties recognized for the year ended January 29, 2011 include reductions in conjunction with the filing of tax accounting method changes.  The interest and penalties recognized for the year ended January 30, 2010 include the impact of the reopening of statutes of limitations caused by amended returns and our Fiscal 2008 loss carryback claim.

Our liabilities for unrecognized tax benefits and accrued interest and penalties are included in “Other non-current liabilities” on our consolidated balance sheets.

As of January 28, 2012 it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next twelve months by as much as $11,491,000 as a result of resolutions of audits related to U.S. Federal and state tax positions.

As of January 28, 2012, $39,720,000 of our cash and cash equivalents was held by our foreign subsidiary.  If these foreign cash and cash equivalents were repatriated to the United States, we may be required to pay income taxes on the amounts repatriated.  We do not intend to repatriate our foreign cash and cash equivalents.

Our U.S. Federal income tax returns for Fiscal 2004 and beyond remain subject to examination by the U.S. Internal Revenue Service (“IRS”) due to statute of limitations and the filing of amended returns and NOL carryback claims.  We file returns in numerous state jurisdictions, with varying statutes of limitations.  Our state tax returns for Fiscal 2007 and subsequent years, depending upon the jurisdiction, generally remain subject to examination.  The statute of limitations on a limited number of returns for years prior to Fiscal 2007 has been extended by agreement between us and the particular state jurisdiction.  The earliest year still subject to examination by state tax authorities is Fiscal 2003.