Bed, Bath and Beyond 2006 Annual Report Download - page 25

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BED BATH& BEYOND ANNUAL REPORT 2006
23
6. PROVISION FOR INCOME TAXES
The components of the provision for income taxes are as follows:
FISCAL YEAR ENDED
March 3, February 25, February 26,
(in thousands) 2007 2006 2005
Current:
Federal $ 375,800)$ 331,930)$ 271,061
State and local 50,060)36,188)31,106
425,860)368,118)302,167
Deferred:
Federal (81,067) (24,681) 2,715
State and local (6,158) (1,193) 1,341
(87,225) (25,874) 4,056
$ 338,635)$ 342,244)$ 306,223
At March 3, 2007 and February 25, 2006, included in other current assets and in other assets is a net current deferred income tax
asset of $119.4 million and $71.5 million, respectively, and a net noncurrent deferred income tax asset of $58.5 million and
$8.2 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 3, February 25,
(in thousands) 2007 2006
Deferred Tax Assets:
Inventories $ 28,751)$ 29,859)
Deferred rent and other rent credits 42,643)29,130)
Insurance 36,398)26,404)
Stock-based compensation 46,696)9,547)
Merchandise credits and gift card liabilities 42,731)9,103)
Other 30,600)25,656)
Deferred Tax Liabilities:
Depreciation (33,360) (37,986)
Other (16,566) (12,004)
$ 177,893)$ 79,709)
The Company has not established a valuation allowance for the net deferred tax asset as it is considered more likely than not that
it is realizable through a combination of future taxable income, the deductibility of future net deferred tax liabilities and tax
planning strategies.
For fiscal 2006, the effective tax rate is comprised of the Federal statutory income tax rate of 35.00%, the State income tax rate,
net of Federal benefit, of 3.06% and other income tax benefits of 1.76%. For fiscal 2005, the effective tax rate is comprised of the
Federal statutory income tax rate of 35.00%, the State income tax rate, net of Federal benefit, of 2.49% and other income tax
benefits of 0.09%. For fiscal 2004, 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 2.60% and other income tax effects of 0.15%.