Income Taxes

6 Months Ended

Jul. 30, 2011

Income Taxes

Income Taxes

Note 7.  Income Taxes

The effective tax rate was 36.7 % for the second quarter of fiscal 2011. During the second quarter of fiscal 2010, we recorded a tax provision of $1 million, primarily due to additional expense related to discrete items. As a result of our low income base for the second quarter of fiscal 2010, our effective rate was highly sensitive to changes caused by discrete items and permanent differences (i.e. differences between book income and tax income that are not expected to reverse in future periods).

The effective tax rate was 38.3 % for the first six months of fiscal 2011. The effective tax rate was 59.8% for the first six months of fiscal 2010. The higher rate in fiscal 2010 was due primarily to additional expense to correct the federal deferred tax liability relating to state income taxes. We currently estimate our annualized effective tax rate for fiscal 2011 to be 37.8%.