Income Taxes |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 02, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 7. Income Taxes Income tax expense was $27.4 million during the third quarter of Fiscal 2024 compared with $18.3 million during the third quarter of Fiscal 2023. The effective tax rate for the third quarter of Fiscal 2024 was 23.2% compared with 27.4% during the third quarter of Fiscal 2023. The increase in income tax expense is due to higher pre-tax income. The higher tax rate in the prior period is primarily attributable to the disallowance of certain debt extinguishment costs related to the partial repurchase of the 2025 Convertible Notes and higher tax expense from stock-based compensation. Income tax expense was $84.5 million during the nine month period ended November 2, 2024 compared with $40.0 million during the nine month period ended October 28, 2023. The effective tax rate for the nine month period ended November 2, 2024 was 25.8% compared with 26.3% during the nine month period ended October 28, 2023. The increase in income tax expense is due to higher pre-tax income. The higher tax rate in the prior period is primarily attributable to the disallowance of certain debt extinguishment costs related to the partial repurchase of the 2025 Convertible Notes. Net deferred taxes are as follows:
Net deferred tax assets relate to Puerto Rico deferred balances that have a future net benefit for tax purposes. Net deferred tax liabilities primarily relate to intangible assets and depreciation expense where the Company has a future obligation for tax purposes.
As of November 2, 2024, the Company had a deferred tax asset related to net operating losses of $5.4 million, inclusive of $5.0 million related to state net operating losses that expire at various dates between 2025 and 2041, as well as $0.4 million related to Puerto Rico net operating losses that will expire in 2025.
As of November 2, 2024, the Company had a deferred tax asset related to tax credit carry-forwards of $6.1 million, inclusive of $6.0 million of state tax credit carry-forwards, which will begin to expire in 2025, and $0.1 million of deferred tax assets recorded for Puerto Rico alternative minimum tax credits that have an indefinite life. As of November 2, 2024, February 3, 2024 and October 28, 2023, valuation allowances amounted to $7.2 million, $11.4 million and $10.7 million, respectively, related to state and Puerto Rico net operating losses and state tax credit carry-forwards. The Company believes that it is more likely than not that this portion of state and Puerto Rico net operating losses and state tax credit carry-forwards will not be realized. |
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