Table of Contents Genesco Inc. and Subsidiaries Notes to Consolidated Financial Statements Reconciliation of the United States federal statutory rate to the Company’s effective tax rate from continuing operations is as follows: Note 9 Income Taxes, Continued The provision for income taxes resulted in an effective tax rate for continuing operations of 34.55% for Fiscal 2019, compared with an effective tax rate of 46.79% for Fiscal 2018. The tax rate for Fiscal 2019 was lower primarily due the reduction of the U.S. federal statutory rate from 35% to 21%. As of February 2, 2019, February 3, 2018 and January 28, 2017, the Company had state net operating loss carryforwards of $5.7 million (against which a $3.3 million valuation allowance has been provided), $0.9 million and $0.4 million, respectively, which expire in fiscal years 2022 through 2039, and a federal net operating loss carryforward of $15.8 million for the fiscal year ended February 2, 2019, which has no expiration. As of February 2, 2019, February 3, 2018 and January 28, 2017, the Company had state tax credits of $0.4 million at the end of each year. These credits expire in fiscal years 2020 through 2025. As of February 2, 2019, February 3, 2018 and January 28, 2017, the Company had foreign net operating loss carryforwards of $28.4 million, $10.4 million and $7.3 million, respectively, which expire in 20 years. As of February 2, 2019, the Company has provided a total valuation allowance of approximately $20.4 million on deferred tax assets associated primarily with foreign and state net operating losses for which management has determined it is more likely than not that the deferred tax assets will not be realized. The $14.0 million net increase in valuation allowance during Fiscal 2019 from the $6.4 million provided for as of February 3, 2018 relates to increases of $5.3 million in foreign net operating losses and increases of $5.4 million in fixed asset-related and other deferred tax assets that will likely never be realized. The Company has also provided a valuation on state net operating loss carryforwards of $3.3 million. Management believes that it is more likely than not that the remaining deferred tax assets will be fully realized. 95 2019 2018 2017 U. S. federal statutory rate of tax 21.00 % 33.72 % 35.00 % State taxes (net of federal tax benefit) 5.67 3.58 4.07 Foreign rate differential (2.56) (5.66) (3.38) Change in valuation allowance 11.51 1.95 1.18 Impact of statutory rate change — 7.74 — Credits (2.65) (1.80) (1.20) Permanent items 2.27 2.77 1.37 Uncertain federal, state and foreign tax positions (1.68) (1.36) (1.21) Transition tax 2.23 6.47 — Other (1.24) (0.62) (0.47) Effective Tax Rate 34.55 % 46.79 % 35.36 %