Bed, Bath and Beyond 2009 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2009 Bed, Bath and Beyond annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

BED BATH & BEYOND 2009 ANNUAL REPORT
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7. PROVISION FOR INCOME TAXES
The components of the provision for income taxes are as follows:
FISCAL YEAR ENDED
February 27, February 28, March 1,
(in thousands) 2010 2009 2008
Current:
Federal $ 346,875 $ 233,216 $ 276,986
State and local 61,080 47,294 23,123
407,955 280,510 300,109
Deferred:
Federal (17,851) (19,419) 5,483
State and local (4,882) (2,906) (3,168)
(22,733) (22,325) 2,315
$ 385,222 $ 258,185 $ 302,424
At February 27, 2010 and February 28, 2009, included in other current assets and in other assets is a net current deferred income
tax asset of $167.2 million and $145.8 million, respectively, and a net noncurrent deferred income tax asset of $96.6 million and
$96.2 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 compo-
nents of the Company’s deferred tax assets and liabilities consist of the following:
February 27, February 28,
(in thousands) 2010 2009
Deferred tax assets:
Inventories $ 34,659 $ 23,904
Deferred rent and other rent credits 64,707 59,785
Insurance 44,386 40,198
Stock-based compensation 60,994 65,081
Merchandise credits and gift card liabilities 27,409 33,539
Accrued expenses 64,388 57,113
Other 25,543 17,637
Deferred tax liabilities:
Depreciation (15,593) (20,841)
Goodwill (25,648) (20,502)
Other (17,000) (13,918)
$ 263,845 $ 241,996
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.
The Company adopted updated accounting guidance related to income taxes on March 4, 2007 (“Adoption Date”). This guidance
addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in
the financial statements. The Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely
than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest
benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities. This guid-
ance also provided direction on derecognition, classification, interest and penalties on income taxes, accounting in interim periods
and requires increased disclosures.
Upon adoption of this accounting guidance, the Company recognized a $13.1 million increase to retained earnings to reflect the
change to its liability for gross unrecognized tax benefits as required. The Company also recorded additional gross unrecognized
tax benefits, and corresponding higher deferred tax assets, of $35.6 million as a result of the adoption. At March 4, 2007 the total