Audit to Bring Higher Profit at Toys R Us

Toys R Us Inc. said its second-quarter profit would rise by $200 million because of a favorable outcome in an Internal Revenue Service audit of its 1997 to 1999 tax returns.

The gain stems from a reversal of tax reserves it previously took, the Wayne, N.J.-based retailer said in a regulatory filing.

The reversal will decrease income tax expense and increase net earnings in the quarter ending July 31.

The filing was made after the close of regular trading. Shares of Toys R Us fell 19 cents to $16.11 on the New York Stock Exchange.