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INCOME TAXES | 12 Months Ended
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Feb. 03, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The domestic and foreign components of (loss) income before (benefit) provision for income taxes were as follows:
(In millions) | 2018 |  | 2017 |  | 2016
Domestic | $ | (5.3 | ) |  | $ | (102.0 | ) |  | $ | 60.9 |
Foreign | 780.9 |  |  | 612.2 |  |  | 613.3 |
Total | $ | 775.6 |  |  | $ | 510.2 |  |  | $ | 674.2 |
The domestic loss before benefit for income taxes in 2018 and 2017 is primarily attributable to the domestic portion of certain non-recurring charges incurred in 2018 and 2017. Please see Note 20, “Segment Data,” for further discussion of these costs. Taxes paid were $138.4 million, $164.6 million and $85.3 million in 2018, 2017 and 2016, respectively. The provision (benefit) for income taxes attributable to income consisted of the following:
(In millions) | 2018 |  | 2017 |  | 2016
Federal: |  |  |  |  |
Current | $ | (30.5 | ) |  | $ | 51.7 |  |  | $ | (2.7 | )
Deferred | (53.2 | ) | (1) | (198.3 | ) | (1) | (9.3 | )
State and local: |  |  |  |  |  |  |  |
Current | 4.6 |  |  | 3.5 |  |  | (2.4 | )
Deferred | 9.6 |  |  | (7.8 | ) |  | (0.9 | )
Foreign: |  |  |  |  |  |  |  |
Current | 170.2 |  |  | 143.5 |  |  | 129.3 |
Deferred | (69.7 | ) | (2) | (18.5 | ) |  | 11.5 |
Total | $ | 31.0 |  |  | $ | (25.9 | ) |  | $ | 125.5 |
(1) Includes a $24.7 million benefit in 2018 and a $52.8 million benefit in 2017 related to the U.S. Tax Legislation.
(2) | Includes a $41.1 million benefit related to the remeasurement of certain net deferred tax liabilities in connection with the enactment of legislation in the Netherlands known as the “2019 Dutch Tax Plan,” which became effective on January 1, 2019 and includes a gradual reduction of the corporate income tax rate by 2021.
The provision (benefit) for income taxes for the years 2018, 2017 and 2016 was different from the amount computed by applying the statutory United States federal income tax rate to the underlying income as follows:
| 2018 |  | 2017 |  | 2016
Statutory federal income tax rate (1) | 21.0 | % |  | 33.7 | % |  | 35.0 | %
State and local income taxes, net of federal income tax benefit | 0.5 | % |  | (1.1 | )% |  | 0.4 | %
Effects of international jurisdictions, including foreign tax credits | (9.5 | )% | (2) | (20.3 | )% |  | (12.9 | )%
Change in estimates for uncertain tax positions | (3.7 | )% |  | (7.5 | )% |  | (3.7 | )%
Change in valuation allowance | (5.3 | )% | (3) | 11.0 | % | (4) | (0.1 | )%
One-time transition tax due to U.S. Tax Legislation | — | % |  | 34.0 | % |  | — | %
Remeasurement due to U.S. Tax Legislation | 0.2 | % |  | (51.9 | )% |  | — | %
Tax on foreign earnings (U.S. Tax Legislation - GILTI and FDII) | 1.9 | % |  | — | % |  | — | %
Excess tax benefits related to stock-based compensation | (0.6 | )% |  | (2.8 | )% | (5) | — | %
Other, net | (0.5 | )% |  | (0.2 | )% |  | (0.1 | )%
Effective income tax rate | 4.0 | % |  | (5.1 | )% |  | 18.6 | %
(1) | The United States statutory federal income tax rate changed from 35.0% to 21.0%, effective January 1, 2018, as a result of the U.S. Tax Legislation. The United States statutory federal income tax rate for 2017 is a blended rate of 33.7%.
(2) | Includes a $41.1 million benefit related to the remeasurement of certain net deferred tax liabilities in connection with the 2019 Dutch Tax Plan.
(3) | Includes the release of a $26.3 million valuation allowance on the Company’s foreign tax credits to adjust the provisional amount recorded in 2017 as a result of the U.S. Tax Legislation.
(4) | Includes the recognition of a $38.5 million provisional valuation allowance on the Company’s foreign tax credits as a result of the U.S. Tax Legislation.
(5) | Includes an excess tax benefit from the exercise of stock options by the Company’s Chairman and Chief Executive Officer.
The Company files income tax returns in more than 40 international jurisdictions each year. Most of the international jurisdictions in which the Company files tax returns had lower statutory tax rates than the United States statutory tax rate in 2016 and in 2017 prior to the effective date of the U.S. Tax Legislation. A substantial amount of the Company’s earnings comes from international operations, particularly in the Netherlands and Hong Kong, where income tax rates, coupled with special rates levied on income from certain of our jurisdictional activities, continue to be lower than the United States statutory income tax rate after giving effect to the U.S. Tax Legislation, and reduced the Company’s consolidated effective income tax rate during 2018, 2017 and 2016. The effects of international jurisdictions, including foreign tax credits, reflected in the above table for 2018, 2017 and 2016 included those taxes at statutory income tax rates and at special rates levied on income from certain jurisdictional activities. The Company expects to benefit from these special rates until 2022. The U.S. Tax Legislation enacted on December 22, 2017 significantly revised the United States tax code by, among other things, (i) reducing the corporate income tax rate from 35.0% to 21.0%, effective January 1, 2018, (ii) imposing a one-time transition tax on earnings of foreign subsidiaries deemed to be repatriated, (iii) implementing a modified territorial tax system, (iv) introducing a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations (known as “GILTI”) and a beneficial tax rate to be applied against foreign derived intangible income (known as “FDII”) and (v) introducing a base erosion anti-abuse tax measure (known as “BEAT”) that taxes certain payments between United States corporations and their subsidiaries. The Company recorded a provisional net tax benefit of $52.8 million in the fourth quarter of 2017 in connection with the U.S. Tax Legislation, consisting of a $265.0 million benefit primarily from the remeasurement of the Company’s net deferred tax liabilities to the lower United States corporate income tax rate, partially offset by a $38.5 million valuation allowance on the Company’s foreign tax credits and a $173.7 million transition tax on undistributed post-1986 earnings and profits of foreign subsidiaries deemed to be repatriated. The Company finalized its accounting related to the impacts of the U.S. Tax Legislation on the one-time transition tax liability, deferred taxes, valuation allowances, state tax considerations, and any remaining outside basis differences in the Company’s foreign subsidiaries during 2018. The analysis resulted in the Company recording an additional net tax benefit of $24.7 million to adjust the provisional net tax benefit recorded in the fourth quarter of 2017, during the measurement period allowed by the Securities and Exchange Commission. The net tax benefit included the release of a $26.3 million valuation allowance on the Company’s foreign tax credits, partially offset by a $1.6 million expense related to the remeasurement of the Company’s net deferred tax liabilities. The GILTI provisions of the U.S. Tax Legislation impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations for tax years beginning after December 31, 2017. The guidance indicates that companies must make a policy election to either record deferred taxes for basis differences expected to reverse as a result of the GILTI provisions in future years or treat any taxes on GILTI inclusions as period costs when incurred. The Company has completed its analysis of the tax effects of the GILTI provisions and has elected to account for these tax effects as period costs when incurred. The components of deferred income tax assets and liabilities were as follows:
(In millions) | 2018 |  | 2017
Gross deferred tax assets |  |  |
Tax loss and credit carryforwards | $ | 230.1 |  |  | $ | 247.0 |
Employee compensation and benefits | 83.1 |  |  | 72.2 |
Inventories | 26.8 |  |  | 22.1 |
Accounts receivable | 17.1 |  |  | 17.6 |
Accrued expenses | 30.2 |  |  | 25.5 |
Derivative financial instruments | — |  |  | 18.3 |
Other, net | 13.8 |  |  | 8.7 |
Subtotal | 401.1 |  |  | 411.4 |
Valuation allowances | (62.6 | ) |  | (106.3 | )
Total gross deferred tax assets, net of valuation allowances | $ | 338.5 |  |  | $ | 305.1 |
Gross deferred tax liabilities |  |  |  |  |
Intangibles | $ | (825.3 | ) |  | $ | (898.9 | )
Property, plant and equipment | (33.6 | ) |  | (43.8 | )
Derivative financial instruments | (4.3 | ) |  | — |
Total gross deferred tax liabilities | $ | (863.2 | ) |  | $ | (942.7 | )
Net deferred tax liability | $ | (524.7 | ) |  | $ | (637.6 | )
At the end of 2018, the Company had on a tax effected basis approximately $240.4 million of net operating loss and tax credit carryforwards available to offset future taxable income in various jurisdictions. This included net operating loss carryforwards of approximately $3.2 million and $48.2 million for federal and various state and local jurisdictions, respectively, and $11.7 million for various foreign jurisdictions. The Company also had federal and state tax credit and other carryforwards of $177.3 million. The carryforwards expire principally between 2019 and 2038. Prior to the enactment of the U.S. Tax Legislation, the Company's undistributed foreign earnings were considered permanently reinvested and, as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the U.S. Tax Legislation, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the U.S. Tax Legislation were deemed to have been repatriated and, as a result, the Company recorded a one-time transition tax of $173.7 million in 2017. The Company's intent is to reinvest indefinitely substantially all of its foreign earnings outside of the United States. However, if the Company decides at a later date to repatriate these earnings to the United States, the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and United States state income taxes. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation. Uncertain tax positions activity for each of the last three years was as follows:
(In millions) | 2018 |  | 2017 |  | 2016
Balance at beginning of year | $ | 297.1 |  |  | $ | 245.6 |  |  | $ | 226.8 |
Increases related to prior year tax positions | 13.9 |  |  | 15.4 |  |  | 2.8 |
Decreases related to prior year tax positions | (24.9 | ) |  | (10.3 | ) |  | (9.9 | )
Increases related to current year tax positions | 25.5 |  |  | 79.7 |  |  | 52.0 |
Lapses in statute of limitations | (54.7 | ) |  | (46.3 | ) |  | (24.4 | )
Effects of foreign currency translation | (8.6 | ) |  | 13.0 |  |  | (1.7 | )
Balance at end of year | $ | 248.3 |  |  | $ | 297.1 |  |  | $ | 245.6 |
The entire amount of uncertain tax positions as of February 3, 2019, if recognized, would reduce the future effective tax rate under current accounting guidance. Interest and penalties related to uncertain tax positions are recorded in the Company’s income tax provision. Interest and penalties recognized in the Company’s Consolidated Income Statements for the years 2018, 2017 and 2016 totaled an expense of $12.1 million, $0.9 million and $1.0 million, respectively. Interest and penalties accrued in the Company’s Consolidated Balance Sheets as of February 3, 2019, February 4, 2018 and January 29, 2017 totaled $44.1 million, $29.8 million and $27.8 million, respectively. The Company recorded its liabilities for uncertain tax positions principally in accrued expenses and other liabilities in its Consolidated Balance Sheets. The Company files income tax returns in the United States and in various foreign, state and local jurisdictions. Most examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through 2006. It is reasonably possible that a reduction of uncertain tax positions in a range of $40.0 million to $65.0 million may occur within 12 months of February 3, 2019.

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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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