13. Income Taxes
The components of earnings before income taxes are (in thousands):
|
|
|
Fiscal Year Ended |
|
|||||||||
|
|
|
February 3, 2018 |
|
|
January 28, 2017 |
|
|
January 30, 2016 |
|
|||
|
United States |
|
$ |
54,397 |
|
|
$ |
35,456 |
|
|
$ |
46,868 |
|
|
Foreign |
|
|
(5,994 |
) |
|
|
4,768 |
|
|
|
(1,007 |
) |
|
Total earnings before income taxes |
|
$ |
48,403 |
|
|
$ |
40,224 |
|
|
$ |
45,861 |
|
The components of the provision for income taxes are (in thousands):
|
|
|
Fiscal Year Ended |
|
|||||||||
|
|
|
February 3, 2018 |
|
|
January 28, 2017 |
|
|
January 30, 2016 |
|
|||
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
14,514 |
|
|
$ |
13,350 |
|
|
$ |
16,186 |
|
|
State and local |
|
|
2,477 |
|
|
|
2,338 |
|
|
|
2,591 |
|
|
Foreign |
|
|
1,328 |
|
|
|
1,187 |
|
|
|
972 |
|
|
Total current |
|
|
18,319 |
|
|
|
16,875 |
|
|
|
19,749 |
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
2,598 |
|
|
|
(1,855 |
) |
|
|
(585 |
) |
|
State and local |
|
|
237 |
|
|
|
(266 |
) |
|
|
(832 |
) |
|
Foreign |
|
|
447 |
|
|
|
(434 |
) |
|
|
(1,256 |
) |
|
Total deferred |
|
|
3,282 |
|
|
|
(2,555 |
) |
|
|
(2,673 |
) |
|
Provision for income taxes |
|
$ |
21,601 |
|
|
$ |
14,320 |
|
|
$ |
17,076 |
|
The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax rate is as follows:
|
|
|
Fiscal Year Ended |
|
|||||||||
|
|
|
February 3, 2018 |
|
|
January 28, 2017 |
|
|
January 30, 2016 |
|
|||
|
U.S. federal statutory tax rate |
|
|
33.7 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
|
Change in valuation allowance |
|
|
7.0 |
|
|
|
— |
|
|
|
— |
|
|
State and local income taxes, net of federal effect |
|
|
3.9 |
|
|
|
3.1 |
|
|
|
3.3 |
|
|
Foreign earnings, net |
|
|
0.6 |
|
|
|
(2.3 |
) |
|
|
(0.6 |
) |
|
Other |
|
|
(0.6 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
Effective tax rate |
|
|
44.6 |
% |
|
|
35.6 |
% |
|
|
37.2 |
% |
On December 22, 2017, the Tax Cuts and Jobs Act, a significant modification of existing U.S. federal tax legislation, was enacted which reduced our U.S. federal tax rate from 35.0% to 21.0%, effective January 1, 2018. The statutory tax rate for the current year reflects this change in tax rate. The decrease in rate resulted in a $0.5 million decrease in our provision for income taxes and an immaterial impact on our deferred tax assets. Our accounting for the income tax effects of the new tax legislation, based on available guidance and interpretation, is complete and we do not anticipate material adjustments to such accounting in future periods.
The components of deferred income taxes are (in thousands):
|
|
|
February 3, 2018 |
|
|
January 28, 2017 |
|
||
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
Deferred rent |
|
$ |
11,968 |
|
|
$ |
18,504 |
|
|
Net operating losses |
|
|
9,809 |
|
|
|
5,055 |
|
|
Employee benefits, including stock-based compensation |
|
|
1,757 |
|
|
|
2,916 |
|
|
Accrued liabilities |
|
|
1,586 |
|
|
|
2,279 |
|
|
Inventory |
|
|
981 |
|
|
|
1,458 |
|
|
Other |
|
|
721 |
|
|
|
2,026 |
|
|
Total deferred tax assets |
|
|
26,822 |
|
|
|
32,238 |
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
(9,813 |
) |
|
|
(16,348 |
) |
|
Goodwill and other intangibles |
|
|
(8,355 |
) |
|
|
(7,765 |
) |
|
Other |
|
|
(903 |
) |
|
|
(1,001 |
) |
|
Total deferred tax liabilities |
|
|
(19,071 |
) |
|
|
(25,114 |
) |
|
Net valuation allowances |
|
|
(3,577 |
) |
|
|
(83 |
) |
|
Net deferred tax assets |
|
$ |
4,174 |
|
|
$ |
7,041 |
|
At February 3, 2018 and January 28, 2017, we had $39.1 million and $20.3 million of foreign net operating loss carryovers that could be utilized to reduce future years’ tax liabilities. The tax-effected foreign net operating loss carryovers were $9.8 million and $5.1 million at February 3, 2018 and January 28, 2017. The net operating loss carryovers have an indefinite carryfoward period and currently will not expire.
At February 3, 2018 and January 28, 2017, we had valuation allowances on our deferred tax assets of $3.6 million and $0.1 million, respectively. During the fiscal year ended February 3, 2018, we increased the valuation allowance by $3.5 million due to the uncertainty of the realization of deferred tax assets related to net operating loss carryovers in Austria.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our U.S. federal income tax returns are no longer subject to examination for years before fiscal 2014 and with few exceptions, we are no longer subject to U.S. state examinations for years before fiscal 2013. We are no longer subject to examination for all foreign income tax returns before fiscal 2012.