XML 48 R15.htm IDEA: XBRL DOCUMENT v3.3.1.900
Income Taxes
9 Months Ended
Oct. 31, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company’s income tax benefit during the thirteen and thirty-nine week periods ended October 31, 2015 was $17 thousand and $0.3 million, respectively, on a pre-tax loss from continuing operations of $7.2 million and $18.4 million, respectively, representing an effective tax rate of 0.2% and 1.4%, respectively. In comparison, the Company’s income tax benefit during the thirteen-week and thirty-nine week periods ended November 1, 2014 was $0.5 million and $0.4 million on a pre-tax loss from continuing operations of $7.5 million and $16.6 million, respectively, representing an effective tax rate of 6.3% and 2.7%, respectively.
The effective tax rate of 0.2% during the thirteen-week period ended October 31, 2015 primarily resulted from the benefit associated with an available net operating loss carryback, largely offset by adjustments to deductions in the prior year. The effective tax rate of 1.4% during the thirty-nine week period ended October 31, 2015 primarily resulted from the benefit associated with an available net operating loss carryback, partly offset by adjustments to tax depreciation deductions in prior periods. No income tax benefit was recognized for net increases in deferred tax assets in either period because the valuation allowance against the Company’s deferred tax assets was increased by $3.1 million and $6.7 million, respectively, in the thirteen and thirty-nine week periods ended October 31, 2015. Such increases in the valuation allowance resulted in a full valuation allowance against net deferred tax assets at October 31, 2015 (exclusive of a deferred tax liability with an indefinite reversal pattern). A full valuation allowance was established because the Company has determined, based on the weight of all available positive and negative evidence, that it is not more likely than not that such deferred assets will be realized in the future.
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 net increases in deferred tax assets during these periods 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, respectively. 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 has determined, based on the weight of all available positive and negative evidence, that it is not more likely than not that such deferred assets will 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 year 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 October 31, 2015, the gross amount of unrecognized tax benefits, inclusive of estimated interest and penalties, due to uncertain tax positions was $17 thousand, 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 $9 thousand in estimated interest and penalties related to unrecognized tax benefits accrued as of October 31, 2015.