XML 30 R17.htm IDEA: XBRL DOCUMENT
v3.19.3

Income Taxes | 12 Months Ended
--- | ---
Aug. 03, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income (loss) before income taxes are as follows:
|  | For the Fiscal Year Ended
(in thousands) |  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Income (loss) before income taxes |  |  |  |  |  |
United States |  | $ | 31,657 |  |  | $ | 56,978 |  |  | $ | 12,801 |
Foreign |  | (836 | ) |  | (2,265 | ) |  | — |
Total |  | $ | 30,821 |  |  | $ | 54,713 |  |  | $ | 12,801 |
The components of the provision (benefit) for income tax expense are as follows:
|  | For the Fiscal Year Ended
(in thousands) |  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Current: |  |  |  |  |  |
Federal |  | $ | (221 | ) |  | $ | 2,732 |  |  | $ | 17,027 |
State |  | 2,431 |  |  | 493 |  |  | 3,096 |
Foreign |  | (67 | ) |  | — |  |  | — |
Total current |  | 2,143 |  |  | 3,225 |  |  | 20,123 |
Deferred: |  |  |  |  |  |
Federal |  | (5,464 | ) |  | 7,917 |  |  | (6,009 | )
State |  | (2,667 | ) |  | (1,329 | ) |  | (719 | )
Foreign |  | (72 | ) |  | — |  |  | — |
Total deferred |  | (8,203 | ) |  | 6,588 |  |  | (6,728 | )
Provision (benefit) for income taxes |  | $ | (6,060 | ) |  | $ | 9,813 |  |  | $ | 13,395 |
The reconciliation of our effective tax rate to the statutory federal rate is as follows:
|  | For the Fiscal Year Ended
(in thousands, except percentages) |  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Tax at federal statutory rate |  | $ | 6,473 |  |  | 21.0 | % |  | $ | 14,752 |  |  | 27.0 | % |  | $ | 4,481 |  |  | 35.0 | %
State taxes, net of federal effect |  | (1,068 | ) |  | (3.5 | )% |  | (755 | ) |  | (1.4 | )% |  | 1,270 |  |  | 9.9 | %
Remeasurement of preferred stock warrant liability |  | — |  |  | 0.0 | % |  | (2,881 | ) |  | (5.3 | )% |  | 6,608 |  |  | 51.6 | %
Stock-based compensation |  | (7,114 | ) |  | (23.1 | )% |  | (5,454 | ) |  | (9.9 | )% |  | 229 |  |  | 1.8 | %
Tax Act impact |  | — |  |  | 0.0 | % |  | 6,670 |  |  | 12.2 | % |  | — |  |  | 0.0 | %
Research and development credits |  | (5,984 | ) |  | (19.4 | )% |  | (2,146 | ) |  | (3.9 | )% |  | — |  |  | 0.0 | %
Uncertain tax positions |  | 2,030 |  |  | 6.6 | % |  | 2,846 |  |  | 5.1 | % |  | 23 |  |  | 0.2 | %
Return to provision |  | (1,821 | ) |  | (5.9 | )% |  | (3,891 | ) |  | (7.1 | )% |  | — |  |  | 0.0 | %
Meals and entertainment |  | 765 |  |  | 2.5 | % |  | 652 |  |  | 1.2 | % |  | 1,188 |  |  | 9.3 | %
Other |  | 659 |  |  | 2.1 | % |  | 20 |  |  | 0.0 | % |  | (404 | ) |  | (3.2 | )%
Effective tax rate |  | $ | (6,060 | ) |  | (19.7 | )% |  | $ | 9,813 |  |  | 17.9 | % |  | $ | 13,395 |  |  | 104.6 | %
The components of net deferred tax assets are as follows:
(in thousands) |  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Deferred tax assets: |  |  |  |  |  |
Inventory reserve and uniform capitalization |  | $ | 11,696 |  |  | $ | 7,504 |  |  | $ | 13,378 |
Deferred rent |  | 232 |  |  | 202 |  |  | 4,858 |
Accruals and reserves |  | 6,623 |  |  | 8,274 |  |  | 6,215 |
Research and development credits |  | 4,778 |  |  | 754 |  |  | — |
Stock-based compensation |  | 6,195 |  |  | 2,210 |  |  | 308 |
Deferred revenue |  | 713 |  |  | 739 |  |  | 616 |
Other |  | 302 |  |  | 404 |  |  | 175 |
Gross deferred tax assets |  | 30,539 |  |  | 20,087 |  |  | 25,550 |
Deferred tax liabilities: |  |  |  |  |  |
Depreciation and amortization |  | (8,275 | ) |  | (5,860 | ) |  | (5,407 | )
Other |  | (89 | ) |  | (120 | ) |  | (152 | )
Gross deferred tax liabilities |  | (8,364 | ) |  | (5,980 | ) |  | (5,559 | )
Net deferred tax assets |  | $ | 22,175 |  |  | $ | 14,107 |  |  | $ | 19,991 |
The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017, and significantly changed previous U.S. tax laws, including a reduction of the corporate tax rate from 35% to 21%. For fiscal 2018, the change in the corporate tax rate resulted in a blended U.S. federal statutory rate for the Company of approximately 27%. Certain provisions of the Tax Act, including a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries, were not effective for the Company until fiscal 2019. In accordance with U.S. GAAP, the Company has made an accounting policy election to treat taxes due under the GILTI provision as a current period expense. Implementation of the Tax Act required the Company to record an incremental tax expense due to remeasurement of net deferred tax assets in fiscal 2018, which increased our effective tax rate in fiscal 2018. The Company completed its analysis of the Tax Act in the second quarter of fiscal 2019 and no adjustments were made to the provisional amounts recorded. Our effective tax rate and provision for income taxes decreased from the fiscal year ended July 28, 2018, to the fiscal year ended August 3, 2019, primarily due to increased excess tax benefits from stock-based compensation, additional qualified activities for U.S. and California research and development tax credits, and the prior year Tax Act remeasurement of deferred tax assets that was not in effect for the current year. Our effective tax rate and provision for income taxes decreased from the fiscal year ended July 29, 2017, to the fiscal year ended July 28, 2018, primarily due to stock-based compensation deductions, analysis of our 2016 through 2018 qualified activities for U.S. and California research and development tax credits, and a decrease in the nondeductible remeasurement of the preferred stock warrant liability. These tax benefits were partially offset by tax charges for the remeasurement of our net deferred tax assets associated with the enactment of the Tax Act, which reduced the corporate tax rate from 35% to 21%. The Company considers all undistributed earnings of foreign subsidiaries indefinitely reinvested outside the United States. We had state net operating loss carryforwards of $0.2 million for the year ended July 28, 2018. These losses were fully utilized in the year ended August 3, 2019. As of August 3, 2019, we had federal research and development tax credit carryforwards of $3.5 million, which are set to expire in 2039. As of August 3, 2019, and July 28, 2018, we had California research and development tax credit carryforwards of $5.2 million and $1.5 million, respectively, which are not subject to expiration. Uncertain Tax Positions A reconciliation of our unrecognized tax benefits is as follows:
(in thousands) |  | August 3, 2019 |  | July 28, 2018 |  | July 29, 2017
Balance at the beginning of the year |  | $ | 5,503 |  |  | $ | 1,052 |  |  | $ | 846 |
Lapse of statute of limitations |  | (422 | ) |  | — |  |  | — |
Increase related to prior period tax positions |  | 2,602 |  |  | 2,334 |  |  | — |
Decrease related to prior period tax positions |  | (183 | ) |  | (241 | ) |  | (36 | )
Increase related to current year tax positions |  | 3,495 |  |  | 2,358 |  |  | 242 |
Balance at the end of the year |  | $ | 10,995 |  |  | $ | 5,503 |  |  | $ | 1,052 |
The amount of unrecognized tax benefits relating to our tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, we anticipate that the balance of the liability for unrecognized tax benefits and related deferred tax assets will decrease by $0.9 million during the next 12 months due to lapses of applicable statutes of limitation. Our liability for uncertain tax positions as of August 3, 2019, includes $7.7 million related to amounts that would impact our current and future tax expense. We recognize interest related to uncertain tax positions in our provision for income taxes. The Company files income tax returns in the U.S. federal and various state and local jurisdictions and in the UK. We are subject to UK, U.S. federal, state and local income tax examinations for all prior years. There are no jurisdictions currently under examination.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration