Income Taxes (Tables)

12 Months Ended

Feb. 01, 2020

The provision for income taxes from continuing operations consisted of the following (in millions):



	Fiscal Year
	2019			2018			2017
Current tax (benefit) expense:
Federal	$	(25.3	)	$	45.0		$	104.7
State	1.5			12.8			14.2
Foreign	(0.1		)	38.5			28.5
	(23.9		)	96.3			147.4
Deferred tax expense (benefit):
Federal	12.6			(36.0		)	23.4
State	3.2			(4.0		)	(1.3		)
Foreign	45.7			(14.6		)	(16.0		)
	61.5			(54.6		)	6.1
Total income tax expense	$	37.6		$	41.7		$	153.5

Components of Earnings Before Income Tax expense

The components of (loss) earnings from continuing operations before income taxes consisted of the following (in millions):



	Fiscal Year
	2019			2018			2017
United States	$	(352.8	)	$	(543.4	)	$	310.7
International	(74.0		)	(209.7		)	73.2
Total	$	(426.8	)	$	(753.1	)	$	383.9

Difference in Income Tax Provided and Amounts Determined by Applying Statutory Rate to Income Before Income Taxes

The following is a reconciliation of income tax expense (benefit) from continuing operations computed at the U.S. Federal statutory tax rate to income tax expense (benefit) reported in our consolidated statements of operations. Certain prior year rates have been reclassified to conform with current year presentation:



	Fiscal Year
	2019		2018		2017
Federal statutory tax rate⁽¹⁾	21.0	%	21.0	%	33.7	%
State income taxes, net of federal effect	(1.0	)	(0.9	)	3.0
Foreign income tax rate differential	(0.5	)	2.8		(1.1	)
Change in valuation allowance	(17.9	)	—		(1.1	)
Change in unrecognized tax benefits	3.4		0.2		(1.5	)
Transition tax	—		3.0		2.7
Tax reform	—		—		8.3
Intercompany sale of intangible assets	—		—		(3.4	)
Foreign tax credit	0.2		0.1		(2.5	)
Withholding tax expense	(0.2	)	(0.3	)	2.3
Impairment of goodwill	(15.4	)	(25.6	)	0.1
Nondeductible interest	(0.1	)	(4.2	)	0.5
Simply Mac Loss on Sale	1.6		—		—
Other (including permanent differences)⁽²⁾	0.1		(1.6	)	(1.0	)
	(8.8	)%	(5.5	)%	40.0	%

___________________


(1)	Per IRC Section 15, we have incorporated a statutory rate of 21.0% for our year end current provision ending February 1, 2020.

(2)

Other is comprised of numerous items, none of which is greater than 1.05% of loss before income taxes for fiscal 2019, 1.05% of loss before income taxes for fiscal 2018, and 1.69% of earnings before income taxes for fiscal 2017.

Components of Deferred Tax Assets and Liabilities

Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities which are presented in the table below (in millions).



	February 1, 2020			February 2, 2019
Deferred tax asset:
Inventory	$	10.7		$	14.7
Deferred rents	1.0			3.9
Operating lease liabilities	201.3			—
Stock-based compensation	1.7			1.8
Net operating losses	77.3			78.5
Customer liabilities	11.6			18.6
Property and equipment	3.5			11.3
Credits	27.9			18.2
Accrued compensation	9.6			12.1
Intangible assets	28.5			21.8
Goodwill	1.5			—
Other	22.4			13.1
Total deferred tax assets	397.0			194.0
Valuation allowance	(112.7		)	(32.9		)
Total deferred tax assets, net	284.3			161.1
Deferred tax liabilities:
Goodwill	—			(10.2		)
Prepaid expenses	(3.3		)	(3.6		)
Operating lease right-of-use assets	(198.5		)	—
Other	(0.2		)	(0.1		)
Total deferred tax liabilities	(202.0		)	(13.9		)
Net deferred tax assets	$	82.3		$	147.2
The above amounts are reflected in the consolidated financial statements as:
Deferred income taxes - assets	$	83.0		$	147.3
Deferred income taxes - liabilities	$	(0.7	)	$	(0.1	)

Reconciliation of Changes in Gross Balances of Unrecognized Tax Benefits

A reconciliation of the changes in the gross balances of unrecognized tax benefits follows (in millions):



	Fiscal Year
	2019			2018			2017
Beginning balance of unrecognized tax benefits	$	22.5		$	24.9		$	42.1
Increases related to current period tax positions	0.4			1.1			1.0
Increases related to prior period tax positions	1.6			35.5			11.2
Decreases related to prior period tax positions	(10.2		)	—			—
Reductions as a result of a lapse of the applicable statute of limitations	(4.3		)	(0.6		)	(1.3		)
Reductions as a result of settlements with taxing authorities	(3.5		)	(38.4		)	(28.1		)
Ending balance of unrecognized tax benefits	$	6.5		$	22.5		$	24.9