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Income Taxes
9 Months Ended
Nov. 01, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company’s income tax benefit during the thirteen week period ended November 1, 2014 was $0.5 million on a pretax loss from continuing operations (inclusive of equity method investment income/loss) of $7.5 million, representing an effective tax rate of 6.3%. In comparison, the Company’s income tax benefit during the thirteen week period ended November 2, 2013 was $0.6 million on a pretax loss from continuing operations (inclusive of equity method investment income/loss) of $7.7 million, representing an effective tax rate of 7.7%.
During the thirty-nine week period ended November 1, 2014, the Company's income tax benefit was $0.4 million on a pretax loss from continuing operations (inclusive of equity method investment income/loss) of $16.5 million, representing an effective tax rate of 2.7%. In comparison, the Company’s income tax expense during the thirty-nine week period ended November 2, 2013 was $3.5 million on a pretax loss from continuing operations (inclusive of equity method investment income/loss) of $16.3 million, representing an effective tax rate of (21.0)%.
The effective tax rate of 6.3% and 2.7% during the thirteen and thirty-nine week periods ended November 1, 2014, respectively, primarily resulted from tax benefits recognized as a result of a net operating loss carryback and the expiration of uncertain tax positions, offset in part by increases in deferred tax liabilities with indefinite reversal patterns. No income tax benefit was recognized for a net increase in deferred tax assets (exclusive of deferred tax liabilities with indefinite reversal patterns) because the valuation allowance against the Company’s deferred tax assets was increased by $2.1 million and $5.1 million in the thirteen and thirty-nine week periods ended November 1, 2014. Such increases in the valuation allowance resulted in a full valuation allowance against net deferred tax assets (exclusive of deferred tax liabilities with indefinite reversal patterns). The valuation allowance was increased because the Company had determined, based on the weight of all available positive and negative evidence, that it was not more likely than not that such deferred assets will be realized in the future.
The effective tax rate of 7.7% during the thirteen week period ended November 2, 2013 primarily resulted from the decrease in income tax contingencies during the period. The effective tax rate of (21.0)% during the thirty-nine week period ended November 2, 2013 primarily resulted from the establishment of a valuation allowance against a portion of the Company’s deferred tax assets in the second quarter of fiscal year 2014. Such valuation allowance was established because the Company had determined, based on the weight of all available positive and negative evidence, that it was not more likely than not that such deferred assets would be realized in the future.
The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to fiscal 2012. With respect to state and local jurisdictions, with limited exceptions, the Company and its subsidiaries are no longer subject to income tax audits for fiscal years prior to fiscal 2011.
As of November 1, 2014, the gross amount of unrecognized tax benefits, inclusive of estimated interest and penalties, due to uncertain tax positions was $0.1 million, all of which would affect the effective tax rate if recognized. The Company recognizes accrued estimated interest and penalties related to unrecognized tax benefits in income tax expense. The Company had approximately $56,000 in estimated interest and penalties related to unrecognized tax benefits accrued as of November 1, 2014.