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Income Taxes | 12 Months Ended
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Jan. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes On December 22, 2017, the U.S. government enacted the Tax Act, which, except for certain provisions, is effective for tax years beginning on or after January 1, 2018. The Tax Act significantly changes existing U.S. tax law that affected our fiscal year ended January 31, 2018, including, but not limited to: (i) reducing the U.S. federal corporate tax rate from 35% to 21%; (ii) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years; and, (iii) bonus depreciation that will allow for full expensing of qualified property. Section 15 of the IRC stipulates that our fiscal year ended January 31, 2018 had a blended corporate tax rate of 33.8%, which was based on the applicable tax rates before and after the Tax Act and the number of days in the fiscal year. The Tax Act reduces the federal corporate tax rate to 21% in the fiscal year ending January 31, 2019. The Tax act also establishes new tax laws that will affect our fiscal year ending January 31, 2019, including, but not limited to (i) generally eliminating U.S. federal income taxes on certain dividends from foreign subsidiaries; (ii) creating the base erosion anti-abuse tax, a new minimum tax; (iii) creating a new limitation on deductible interest expense; and (iv) creating the global intangibles low-tax income (“GILTI”) inclusions. The Company’s accounting for the following elements of the Tax Act is incomplete, however, management was able to make reasonable estimates of certain effects and, therefore, recorded the provisional adjustments set forth below. Reduction of U.S. Federal Corporate Tax Rate The Tax Act reduces the U.S. corporate tax rate to 21%, effective January 1, 2018. For certain of the Company’s U.S. deferred tax assets and liabilities, it has recorded a provisional tax expense of $12,022. While the Company is able to make a reasonable estimate of the impact of the reduction in its U.S. corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, the Company’s calculation of deemed repatriation of deferred foreign earnings and profits (“E&P”) and the state tax effect of adjustments made to federal temporary differences. Deemed Repatriation Transition Tax The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current E&P of certain of the Company’s foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company is able to make a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $52,683 on $458,221 of historic unremitted foreign E&P. The Company continues to gather additional information to more-precisely compute the amount of the Transition Tax. Global Intangibles Low-tax Income The Tax Act creates a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s net CFC-tested income over the net deemed tangible income return, which is currently defined as the excess of (i) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over, (ii) the amount of certain interest expense taken into account in the determination of net CFC-tested income. Because of the complexity of the new GILTI tax rules, the Company continues to evaluate this provision of the Tax Act and the application of Accounting Standard Codification 740. Under GAAP, the Company is allowed to make an accounting policy choice of either (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (i.e., the period cost method), or (ii) factoring such amounts into the Company’s measurement of its deferred taxes (i.e., the deferred method). The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing its global income to determine whether it expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends on not only its current structure and estimated future results of global operations, but also its intent and ability to modify its structure and/or its business, management is not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, the Company has not made any adjustments related to potential GILTI tax in its consolidated financial statements and has not made a policy decision regarding whether to record deferred taxes on GILTI. The components of income before income taxes are as follows:
|  | Fiscal Year Ended January 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Domestic |  | $ | 208,787 |  |  | $ | 297,347 |  |  | $ | 323,906 |
Foreign |  |  | 52,579 |  |  |  | 40,752 |  |  |  | 26,125 |
|  | $ | 261,366 |  |  | $ | 338,099 |  |  | $ | 350,031 |
The components of the provision for income tax expense/(benefit) are as follows:
|  | Fiscal Year Ended January 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 124,988 |  |  | $ | 103,951 |  |  | $ | 84,274 |
State |  |  | 10,772 |  |  |  | 15,130 |  |  |  | 21,391 |
Foreign |  |  | 9,014 |  |  |  | 5,699 |  |  |  | 6,215 |
|  | $ | 144,774 |  |  | $ | 124,780 |  |  | $ | 111,880 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 10,270 |  |  | $ | (5,765 | ) |  | $ | 13,985 |
State |  |  | (1,914 | ) |  |  | 1,029 |  |  |  | (1,218 | )
Foreign |  |  | (27 | ) |  |  | (65 | ) |  |  | 895 |
|  |  | 8,329 |  |  |  | (4,801 | ) |  |  | 13,662 |
|  | $ | 153,103 |  |  | $ | 119,979 |  |  | $ | 125,542 |
The following table reflects the differences between the statutory U.S. federal income tax rate and the Company’s effective tax rate:
|  | Fiscal Year Ended January 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Expected provision at statutory U.S. federal tax rate |  |  | 33.8 | % |  |  | 35.0 | % |  |  | 35.0 | %
State and local income taxes, net of federal tax benefit |  |  | 2.3 |  |  |  | 3.1 |  |  |  | 3.7 |
Foreign taxes |  |  | (3.4 | ) |  |  | (2.9 | ) |  |  | (2.0 | )
Federal rehabilitation tax credit |  |  | — |  |  |  | — |  |  |  | (1.9 | )
Net impact of U.S. tax reform |  |  | 24.7 |  |  |  | — |  |  |  | — |
Other |  |  | 1.2 |  |  |  | 0.3 |  |  |  | 1.1 |
Effective tax rate |  |  | 58.6 | % |  |  | 35.5 | % |  |  | 35.9 | %
The significant components of deferred tax assets and liabilities as of January 31, 2018 and 2017 are as follows:
|  | January 31, |
|  | 2018 |  |  | 2017 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaid expense |  | $ | (2,358 | ) |  | $ | (3,460 | )
Depreciation |  |  | (38,662 | ) |  |  | (70,944 | )
Other temporary differences |  |  | (1,017 | ) |  |  | (2,024 | )
Gross deferred tax liabilities |  |  | (42,037 | ) |  |  | (76,428 | )
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred rent |  |  | 54,958 |  |  |  | 79,675 |
Inventory |  |  | 9,726 |  |  |  | 9,760 |
Accounts receivable |  |  | 1,240 |  |  |  | 3,241 |
Net operating loss carryforwards |  |  | 2,364 |  |  |  | 2,859 |
Tax uncertainties |  |  | 1,033 |  |  |  | 1,949 |
Accrued salaries and benefits |  |  | 14,437 |  |  |  | 28,234 |
Income tax credits |  |  | 5,399 |  |  |  | 4,550 |
Other temporary differences |  |  | 8,533 |  |  |  | 5,512 |
Gross deferred tax assets, before valuation allowances |  |  | 97,690 |  |  |  | 135,780 |
Valuation allowances |  |  | (9,451 | ) |  |  | (6,688 | )
Net deferred tax assets |  | $ | 46,202 |  |  | $ | 52,664 |
Net deferred tax assets are attributed to the jurisdictions in which the Company operates. As of January 31, 2018 and 2017, respectively, $19,061 and $28,549 were attributable to U.S. federal, $16,848 and $14,798 were attributed to state jurisdictions and $10,293 and $9,317 were attributed to foreign jurisdictions. As of January 31, 2018, certain non-U.S. subsidiaries of the Company had net operating loss carryforwards for tax purposes of approximately $477 that expire from 2018 through 2028 and approximately $7,941 that do not expire. Certain U.S. subsidiaries of the Company had state net operating loss and credit carryforwards for tax purposes of approximately $5,875 that expire from 2021 through 2038 and $6,448 that expire from 2019 through 2031. As of January 31, 2018, the Company had a full valuation allowance for certain foreign net operating loss carryforwards and a partial valuation allowance against state credit carryforwards where it was uncertain the carryforwards would be utilized. The Company had no valuation allowance for certain other foreign and state net operating loss carryforwards where management believes it is more-likely-than-not the tax benefit of these carryforwards will be realized. In November 2015, the FASB issued an accounting standards update that requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet rather than separating deferred taxes into current and noncurrent amounts. The Company elected to early adopt this update and prospectively applied the update to deferred tax assets and liabilities as of January 31, 2016. As of January 31, 2018, approximately $308,520 of cash and cash equivalents were held by the Company’s non-U.S. subsidiaries for which no deferred taxes have been provided. Additionally, the Company has cumulative undistributed earnings of $458,221 that were subject to the one-time deemed repatriation transition tax required by the Tax Act. The Company continues to believe that certain foreign earnings are indefinitely reinvested; however, as the Company continues to evaluate the impacts of the Tax Act, the Company may change this assertion in a future period. Since under the Tax Act there will be no additional federal income taxes when these amounts are repatriated, and the relevant foreign jurisdictions do not impose a withholding tax on dividends, the Company would only be subject to state income tax on these earnings. A change in this assertion in a future period would not have a material impact on the Company’s financial statements. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
|  | January 31, |
Tax Benefit Reconciliation |  | 2018 |  |  | 2017 |  |  | 2016 |
Balance at the beginning of the period |  | $ | 5,798 |  |  | $ | 7,838 |  |  | $ | 6,889 |
Increases in tax positions for prior years |  |  | 45 |  |  |  | 21 |  |  |  | 4,053 |
Decreases in tax positions for prior years |  |  | (511 | ) |  |  | (725 | ) |  |  | (891 | )
Increases in tax positions for current year |  |  | 128 |  |  |  | 187 |  |  |  | 274 |
Settlements |  |  | — |  |  |  | (590 | ) |  |  | (1,590 | )
Lapse in statute of limitations |  |  | (914 | ) |  |  | (933 | ) |  |  | (897 | )
Balance at the end of the period |  | $ | 4,546 |  |  | $ | 5,798 |  |  | $ | 7,838 |
The total amount of net unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $4,127 and $4,466 as of January 31, 2018 and 2017, respectively. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Income, which is consistent with the recognition of these items in prior reporting periods. During the years ended January 31, 2018, 2017 and 2016, the Company recognized expense/(benefit) of ($209), ($218) and ($686), respectively, related to interest and penalties. The Company accrued $568 and $582 for the payment of interest and penalties as of January 31, 2018 and 2017, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In November 2017, the Company received notification that the Company’s U.S. income tax return for the period ended January 31, 2016 was selected for examination. The Company is also under audit in certain foreign jurisdictions. Certain federal, foreign and state jurisdictions are subject to audit from fiscal 2008 to 2017. It is possible that a state or foreign examination may be resolved within 12 months. Due to the potential for resolution of federal and foreign audit and state examinations, and the expiration of various statutes of limitation, it is possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $3,656.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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