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Income Taxes (Tables) | 12 Months Ended
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Feb. 01, 2020
Income Tax Disclosure [Abstract] |
Schedule of income tax expense (benefit) | Income tax expense (benefit) is summarized as follows (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Federal: |  |  |  |  |
Current | $ | 9,270 |  |  | $ | 16,495 |  |  | $ | 34,181 |
Deferred | 2,263 |  |  | 4,543 |  |  | 21,595 |
State: |  |  |  |  |
Current | 1,622 |  |  | 1,408 |  |  | 1,903 |
Deferred | 1,699 |  |  | 1,532 |  |  | 217 |
Foreign: |  |  |  |  |
Current | 17,166 |  |  | 3,385 |  |  | 7,333 |
Deferred | (9,507 | ) |  | 2,179 |  |  | 8,943 |
Total | $ | 22,513 |  |  | $ | 29,542 |  |  | $ | 74,172 |
Schedule of effective income tax rate reconciliation | Actual income tax expense differs from expected income tax expense obtained by applying the statutory federal income tax rate to earnings before income taxes as follows:
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Computed “expected” tax rate | 21.0 | % |  | 21.0 | % |  | 33.7 | %
State taxes, net of federal benefit | 3.0 | % |  | 1.1 | % |  | 2.4 | %
Non-U.S. tax expense higher (lower) than federal statutory tax rate 1 | 0.0 | % |  | 24.2 | % |  | (10.5 | %)
Tax Reform - repatriation tax adjustment 2,3 | — | % |  | (41.8 | %) |  | 32.8 | %
Tax Reform - deferred tax adjustment | — | % |  | — | % |  | 35.4 | %
Swiss tax reform 4 | (6.5 | %) |  | — | % |  | — | %
Valuation reserve | (0.2 | %) |  | 0.5 | % |  | 12.9 | %
Unrecognized tax liabilities (benefits)3 | (6.2 | %) |  | 51.3 | % |  | 0.8 | %
Share-based compensation | 0.9 | % |  | 0.2 | % |  | 1.5 | %
Net tax settlements | 9.1 | % |  | — | % |  | — | %
Prior year tax adjustments | (1.8 | %) |  | 0.3 | % |  | 0.7 | %
Non-deductible permanent differences | 0.6 | % |  | 16.5 | % |  | (4.1 | %)
Foreign derived intangible income | (3.4 | %) |  | (10.2 | %) |  | — | %
Other | 1.7 | % |  | 0.1 | % |  | — | %
Effective tax rate | 18.2 | % |  | 63.2 | % |  | 105.6 | %
______________________________________________________________________
1 | The jurisdictional location of pre-tax income (loss) may represent a significant component of the Company’s effective tax rate as earnings (loss) in foreign jurisdictions are taxed at rates that are different from the U.S. statutory income tax rate. Furthermore, the impact of changes in the jurisdictional location of pre-tax income (loss) on the Company’s effective tax rate will be greater at lower levels of consolidated pre-tax income (loss). These amounts exclude the impact of net changes in valuation allowances, audit and other adjustments related to the Company’s non-U.S. operations, as they are reported separately in the appropriate corresponding line items in the table above.
2 | During fiscal 2018, the Company recognized additional tax expense resulting from the enactment of the Tax Reform to account for the estimated effects of the transitional tax on the deemed repatriation of foreign earnings and reduced deferred tax assets due to lower future U.S. corporate tax rates. During the third quarter of fiscal 2019, the Company completed the preparation of its U.S. federal tax return for fiscal 2018 and concluded, based on the additional information that had become available, that no transition tax was due with respect to the Tax Reform. As a result, during the third quarter of fiscal 2019, the Company reversed a portion of provisional amounts initially recorded during the three months ended February 3, 2018 and recorded a benefit of $19.6 million.
3 | During the fourth quarter of fiscal 2019, the Company concluded based on additional regulatory guidance issued during the quarter related to the Tax Reform, that the Company would owe transition taxes if proposed legislation that clarifies existing tax regulation with respect to the dividends received deduction calculation is passed into law. As a result, during the three months ended February 2, 2019, the Company recorded additional charges due to the Tax Reform of $25.8 million as an uncertain tax position. In fiscal 2020, the Company revised its tax liability estimation and related accrual to $19.9 million.
4 During fiscal 2020, the Company recognized additional tax benefits resulting from the enactment of the Swiss tax reform. The additional tax benefits related primarily to the recognition of a deferred tax asset associated with the estimated value of a tax basis step-up of the Company’s Switzerland subsidiary’s assets.
Schedule of total income tax expense (benefit) allocation | Total income tax expense (benefit) is allocated as follows (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Operations | $ | 22,513 |  |  | 29,542 |  |  | $ | 74,172 |
Stockholders’ equity 1 | (1,142 | ) |  | 3,006 |  |  | (3,173 | )
Total income tax expense | $ | 21,371 |  |  | $ | 32,548 |  |  | $ | 70,999 |
______________________________________________________________________ 1 In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the “Notes”) in a private offering. Paid-in capital includes $1.3 million in net deferred tax assets in connection with the related convertible note hedge transactions and debt discount associated with the Notes. Refer to Note 10 for more information on the convertible senior notes and related transactions.
Schedule of tax effects of components of other comprehensive income (loss) | The tax effects of the components of other comprehensive income (loss) are allocated as follows (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Derivative financial instruments designated as cash flow hedges | $ | 80 |  |  | $ | 2,402 |  |  | $ | (2,738 | )
Defined benefit plans | 68 |  |  | 604 |  |  | (435 | )
Total income tax expense (benefit)1 | $ | 148 |  |  | $ | 3,006 |  |  | $ | (3,173 | )
______________________________________________________________________ 1 During the fourth quarter of fiscal 2018, the Company early adopted authoritative guidance which addresses certain stranded income tax effects in accumulated other comprehensive loss resulting from the Tax Reform enacted in December 2017. As a result, the Company recorded a cumulative adjustment to increase retained earnings by $1.2 million with a corresponding reduction to accumulated other comprehensive loss related to the Company’s Supplemental Executive Retirement Plan and its interest rate swap designated as a cash flow hedge based in the U.S. The impact from this reclassification on accumulated other comprehensive income (loss) has been excluded from the amounts provided in this table.
Schedule of total earnings before income tax expense and noncontrolling interest | Total earnings before income tax expense and noncontrolling interests are comprised of the following (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Domestic operations | $ | 91,008 |  |  | $ | 97,885 |  |  | $ | 39,112 |
Foreign operations | 32,734 |  |  | (51,177 | ) |  | 31,159 |
Earnings before income tax expense and noncontrolling interests | $ | 123,742 |  |  | $ | 46,708 |  |  | $ | 70,271 |
Schedule of tax effects of temporary differences | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of February 1, 2020 and February 2, 2019 are presented below (in thousands):
| Feb 1, 2020 |  | Feb 2, 2019
Deferred tax assets: |  |  |  |
Operating lease liabilities | $ | 187,981 |  |  | $ | — |
Net operating losses | 24,156 |  |  | 23,212 |
Defined benefit plans | 12,539 |  |  | 12,883 |
Convertible senior notes hedge transactions | 12,284 |  |  | — |
Deferred compensation | 9,282 |  |  | 9,823 |
Goodwill amortization | 7,301 |  |  | — |
Deferred income | 5,568 |  |  | 4,373 |
Inventory valuation | 3,378 |  |  | 1,339 |
Lease incentives | 3,272 |  |  | 1,337 |
Account receivable reserve | 2,043 |  |  | 2,009 |
Accrued bonus | 1,993 |  |  | 2,208 |
Sales return and other reserves | 1,981 |  |  | 1,933 |
Uniform capitalization | 890 |  |  | 1,419 |
Rent expense | — |  |  | 7,114 |
Excess of book over tax depreciation/amortization | — |  |  | 6,638 |
Other | 14,296 |  |  | 18,883 |
Total deferred tax assets | 286,964 |  |  | 93,171 |
Deferred tax liabilities: |  |  |
Operating right-of-use assets | (175,370 | ) |  | — |
Convertible senior notes debt discount | (11,167 | ) |  | — |
Goodwill amortization | — |  |  | (2,267 | )
Other | (6,112 | ) |  | (870 | )
Valuation allowance | (30,760 | ) |  | (32,810 | )
Net deferred tax assets | $ | 63,555 |  |  | $ | 57,224 |
Schedule of reconciliation of unrecognized tax benefit | A reconciliation of the beginning and ending amount of gross unrecognized tax benefit (excluding interest and penalties) is as follows (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| Feb 1, 2020 |  | Feb 2, 2019 |  | Feb 3, 2018
Beginning balance | $ | 38,751 |  |  | $ | 16,771 |  |  | $ | 12,983 |
Additions: |  |  |  |  |
Tax positions related to the prior year | 3,074 |  |  | 25,822 |  |  | 3,129 |
Tax positions related to the current year | 264 |  |  | 267 |  |  | 222 |
Reductions: |  |  |  |  |
Tax positions related to the prior year | (12,658 | ) |  | (2,934 | ) |  | (355 | )
Tax positions related to the current year | — |  |  | (449 | ) |  | (303 | )
Expiration of statutes of limitations | — |  |  | — |  |  | (206 | )
Foreign currency translation | (248 | ) |  | (726 | ) |  | 1,301 |
Ending balance | $ | 29,183 |  |  | $ | 38,751 |  |  | $ | 16,771 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32639-109319 + Details
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