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Income Taxes
3 Months Ended
Apr. 30, 2011
Income Taxes [Abstract]  
Income Taxes
6. Income Taxes
The Company’s effective income tax rate, including discrete items, was 20.3% and (28.7%) for the thirteen weeks ended April 30, 2011 and May 1, 2010, respectively. The effective income tax rate is based upon the estimated income or loss for the year, the estimated composition of the income or loss in different jurisdictions and discrete adjustments for settlements of tax audits or assessments, the resolution or identification of tax position uncertainties and non-deductible costs associated with the merger. Income tax expense for the thirteen weeks ended April 30, 2011 and May 1, 2010 is primarily a function of the Company’s applicable effective rates and the results of operations within certain jurisdictions in the respective periods.
The Company continues to provide a full valuation allowance against its net deferred tax assets, excluding deferred tax liabilities for non-amortizing intangibles, due to insufficient positive evidence that the deferred tax assets will be realized in the future.
In fiscal 2010, as a result of the BPW Transactions, the Company recorded an increase in its unrecognized tax benefits of approximately $20.0 million that reduced a portion of the Company’s net deferred tax assets before consideration of any valuation allowance. The Company submitted a Private Letter Ruling request related to this tax position during fiscal 2010 which was granted in the first quarter of 2011. As a result of this favorable outcome, the Company recorded a decrease in its unrecognized tax benefits of approximately $20.0 million which increased the Company’s net deferred tax assets before consideration of any valuation allowance.