Bed, Bath and Beyond 2002 Annual Report Download - page 16

BED BATH & BEYOND ANNUAL REPORT 2002
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5. PROVISION FOR INCOME TAXES
The components of the provision for income taxes are as follows:
FISCAL YEAR
(in thousands) 2002 2001 2000
Current:
Federal $184,055)$123,787 $102,178)
State and local 18,405)11,953 11,678)
202,460)135,740 113,856)
Deferred:
Federal (12,083) 1,188 (3,535)
State and local (1,208) 545 (404)
(13,291) 1,733 (3,939)
$189,169)$137,473 $109,917)
At March 1, 2003 and March 2, 2002, included in other
current assets and in deferred rent and other liabilities is a net
current deferred income tax asset of $50.2 million and $39.6
million and a net noncurrent deferred income tax liability of $5.4
million and $8.1 million, respectively. These amounts represent
the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The significant
components of the Company’s deferred tax assets and liabilities
consist of the following:
MARCH 1,MARCH 2,
(in thousands) 2003 2002
Deferred Tax Assets:
Inventories $ 18,134)$ 14,827)
Deferred rent 11,207)10,193)
Insurance 18,063)7,306)
Other 22,578)20,300)
Deferred Tax Liability:
Depreciation (25,186) (21,122)
$ 44,796)$ 31,504)
For fiscal 2002 and 2001, the effective tax rate is comprised
of the Federal statutory income tax rate of 35.00% and the State
income tax rate, net of Federal benefit, of 3.50%. For fiscal 2000,
the effective tax rate was comprised of the Federal statutory
income tax rate of 35.00% and the state income tax rate, net
of Federal benefit, of 4.00%.
6. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
A. The Company has an interest in certain life insurance policies
on the lives of its Co-Chairmen. The beneficiaries of these policies
are related to the aforementioned individuals. The Company’s
interest in these policies is equivalent to the net premiums paid
by the Company. At March 1, 2003 and March 2, 2002, other
assets (noncurrent) include $5.4 million and $5.0 million,
respectively, representing the Company’s interest in the life
insurance policies.
B. The Company obtained certain payroll services from a related
party through August 2001. In fiscal 2002, the Company paid no
such fees. The Company paid fees for such services of $203,000
and $366,000 for fiscal 2001 and 2000, respectively.
C. The Company made charitable contributions to the Mitzi
and Warren Eisenberg Family Foundation, Inc. (the “Eisenberg
Foundation”) and the Feinstein Family Foundation, Inc. (the
“Feinstein Foundation”) in the aggregate amounts of $913,000,
$761,000 and $634,000 for fiscal 2002, 2001, and 2000,
respectively. The Eisenberg Foundation and the Feinstein
Foundation are each not-for-profit corporations of which
Messrs. Eisenberg and Feinstein, the Co-Chairmen of the
Company, and their family members are the trustees and officers.
D. The Company leased warehouse space from a related party
and paid occupancy costs of $461,000 in fiscal 2002.
7. LEASES
The Company leases retail stores, as well as warehouses, office
facilities and equipment, under agreements expiring at various
dates through 2022. Certain leases provide for contingent rents
(which are based upon store sales exceeding stipulated amounts
and are immaterial in fiscal 2002, 2001 and 2000), scheduled
rent increases and renewal options generally ranging from five
to fifteen years. The Company is obligated under a majority of the
leases to pay for taxes, insurance and common area maintenance
charges.
As of March 1, 2003, future minimum lease payments under
noncancelable operating leases are as follows:
Fiscal Year (in thousands) Amount
2003 $ 230,974
2004 239,274
2005 238,294
2006 234,388
2007 225,483
Thereafter 1,190,357
Total future minimum lease payments $2,358,770
Expenses for all operating leases were $219.8 million,
$178.7 million and $142.6 million for fiscal 2002, 2001 and 2000,
respectively.
Notes to Consolidated Financial Statements
(Continued)