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Income Taxes | 12 Months Ended
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Jan. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly changed existing U.S. tax law that affected fiscal 2019 and 2018, by, among other things: (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; (iii) implementing bonus depreciation that will allow for full expensing of qualified property; (iv) generally eliminating U.S. federal income taxes on certain dividends from foreign subsidiaries; (v) creating the base erosion anti-abuse tax, a new minimum tax; (vi) creating a new limitation on deductible interest expense; and (vii) creating the global intangibles low-tax income (“GILTI”) inclusions. The Tax Act reduced the federal corporate tax rate to 21% as of January 1, 2018. Due to Section 15 of the Internal Revenue Code of 1986, as amended, the Company had a blended corporate tax rate of 33.8% for fiscal 2018. The Company’s federal corporate tax rate was 21% for fiscal 2019. In fiscal 2018, the Company recorded provisional estimates for U.S. tax reform in its provision for income taxes, which amounted to an expense of $64,705. Staff Accounting Bulletin No. 118 (“SAB No. 118”) allowed registrants to record provisional estimates for U.S. tax reform during a measurement period not to exceed one year from the enactment date, December 22, 2017. In fiscal 2019, the Company recorded an additional net $1,197 tax expense to adjust its initial provisional estimates for U.S. tax reform in its provision for income taxes. Reduction of U.S. Federal Corporate Tax Rate The Tax Act reduced 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, the Company recorded an adjustment in December 2018 to adjust its initial provisional estimate for the impact of the reduction in its U.S. corporation rate. The adjustment was specifically related to changes to certain deferred tax assets and liabilities upon filing of the Company’s 2017 tax return, which impacted the Company’s initial estimate of the revaluation of these deferred tax assets and liabilities as a result of the reduced corporate tax rate. 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 recorded an adjustment in December 2018 to adjust its initial provisional estimate for the Transition Tax. The adjustment was specifically related to changes in estimates for previously untaxed accumulated and current E&P of certain of the Company’s foreign subsidiaries, and the associated foreign tax credits. 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. The Company has elected to treat 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). While management has completed its analysis within the applicable measurement period, pursuant to SAB No. 118, the Company is accounting for the tax impact of the Tax Act based on an interpretation of existing statutory law, including guidance issued by the U.S. Treasury and the U.S. Internal Revenue Service (the “IRS”). During the second half of fiscal 2019, the U.S. Treasury and the IRS issued certain proposed regulations addressing new provisions such as GILTI, Base Erosion and Anti-abuse Tax, Foreign Tax Credit and the Anti-hybrid Regulations. While there can be no assurances as to the effect of any final regulations on the Company’s income tax provision, management will continue to evaluate the impact as any regulations issued become final. The components of income before income taxes are as follows:
|  | Fiscal Year Ended January 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Domestic |  | $ | 336,823 |  |  | $ | 208,787 |  |  | $ | 297,347 |
Foreign |  |  | 48,730 |  |  |  | 52,579 |  |  |  | 40,752 |
|  | $ | 385,553 |  |  | $ | 261,366 |  |  | $ | 338,099 |
The components of the provision for income tax expense/(benefit) are as follows:
|  | Fiscal Year Ended January 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 71,520 |  |  | $ | 124,988 |  |  | $ | 103,951 |
State |  |  | 18,088 |  |  |  | 10,772 |  |  |  | 15,130 |
Foreign |  |  | 9,356 |  |  |  | 9,014 |  |  |  | 5,699 |
|  | $ | 98,964 |  |  | $ | 144,774 |  |  | $ | 124,780 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (6,818 | ) |  | $ | 10,270 |  |  | $ | (5,765 | )
State |  |  | 965 |  |  |  | (1,914 | ) |  |  | 1,029 |
Foreign |  |  | (5,561 | ) |  |  | (27 | ) |  |  | (65 | )
|  |  | (11,414 | ) |  |  | 8,329 |  |  |  | (4,801 | )
|  | $ | 87,550 |  |  | $ | 153,103 |  |  | $ | 119,979 |
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, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Expected provision at statutory U.S. federal tax rate |  |  | 21.0 | % |  |  | 33.8 | % |  |  | 35.0 | %
State and local income taxes, net of federal tax benefit |  |  | 3.9 |  |  |  | 2.3 |  |  |  | 3.1 |
Foreign taxes |  |  | (1.5 | ) |  |  | (3.4 | ) |  |  | (2.9 | )
Net impact of U.S. tax reform |  |  | 0.3 |  |  |  | 24.7 |  |  |  | — |
Other |  |  | (1.0 | ) |  |  | 1.2 |  |  |  | 0.3 |
Effective tax rate |  |  | 22.7 | % |  |  | 58.6 | % |  |  | 35.5 | %
The significant components of deferred tax assets and liabilities as of January 31, 2019 and 2018 are as follows:
|  | January 31, |
|  | 2019 |  |  | 2018 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaid expense |  | $ | (1,729 | ) |  | $ | (2,358 | )
Depreciation |  |  | (39,303 | ) |  |  | (38,662 | )
Other temporary differences |  |  | (1,258 | ) |  |  | (1,017 | )
Gross deferred tax liabilities |  |  | (42,290 | ) |  |  | (42,037 | )
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred rent |  |  | 52,409 |  |  |  | 54,958 |
Inventory |  |  | 10,579 |  |  |  | 9,726 |
Accounts receivable |  |  | 2,198 |  |  |  | 1,240 |
Net operating loss carryforwards |  |  | 1,945 |  |  |  | 2,364 |
Tax uncertainties |  |  | 953 |  |  |  | 1,033 |
Accrued salaries and benefits |  |  | 20,216 |  |  |  | 14,437 |
Income tax credits |  |  | 4,659 |  |  |  | 5,399 |
Other temporary differences |  |  | 6,119 |  |  |  | 8,533 |
Gross deferred tax assets, before valuation allowances |  |  | 99,078 |  |  |  | 97,690 |
Valuation allowances |  |  | (3,906 | ) |  |  | (9,451 | )
Net deferred tax assets |  | $ | 52,882 |  |  | $ | 46,202 |
Net deferred tax assets are attributed to the jurisdictions in which the Company operates. As of January 31, 2019 and 2018, respectively, $22,885 and $19,061 were attributable to U.S. federal, $15,079 and $16,848 were attributed to state jurisdictions and $14,918 and $10,293 were attributed to foreign jurisdictions. As of January 31, 2019, certain non-U.S. subsidiaries of the Company had net operating loss carryforwards for tax purposes of approximately $471 that expire from 2019 through 2029 and approximately $5,689 that do not expire. Certain U.S. subsidiaries of the Company had state net operating loss carryforwards for tax purposes of approximately $7,641 that expire from 2021 through 2038 and approximately $2,866 that do not expire. Certain U.S. subsidiaries of the Company had state credit carryforwards for tax purposes of approximately $5,954 that expire from 2021 through 2031. As of January 31, 2019, 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. As of January 31, 2019, approximately $224,876 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 $352,076 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 |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at the beginning of the period |  | $ | 4,546 |  |  | $ | 5,798 |  |  | $ | 7,838 |
Increases in tax positions for prior years |  |  | 18,077 |  |  |  | 45 |  |  |  | 21 |
Decreases in tax positions for prior years |  |  | (921 | ) |  |  | (511 | ) |  |  | (725 | )
Increases in tax positions for current year |  |  | 196 |  |  |  | 128 |  |  |  | 187 |
Settlements |  |  | — |  |  |  | — |  |  |  | (590 | )
Lapse in statute of limitations |  |  | (492 | ) |  |  | (914 | ) |  |  | (933 | )
Balance at the end of the period |  | $ | 21,406 |  |  | $ | 4,546 |  |  | $ | 5,798 |
The total amount of net unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $21,319 and $4,127 as of January 31, 2019 and 2018, 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, 2019, 2018 and 2017, the Company recognized expense/(benefit) of $449, ($209) and ($218), respectively, related to interest and penalties. The Company accrued $822 and $568 for the payment of interest and penalties as of January 31, 2019 and 2018, 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 2009 to 2018. 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 $3,083.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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