Bed, Bath and Beyond 2012 Annual Report Download - page 32

The following table summarizes the activity related to the gross unrecognized tax benefits from uncertain tax positions:
(in thousands)
March 2,
2013
February 25,
2012
Balance at beginning of year $124,963 $141,869
Increase related to current year positions 24,892 23,286
Increase related to prior year positions 1,183 12,533
Decrease related to prior year positions (36,104) (33,191)
Settlements (15,670) (17,822)
Lapse of statute of limitations (1,372) (1,712)
Balance at end of year $ 97,892 $124,963
At March 2, 2013, the Company has recorded approximately $17.8 million and $80.1 million of gross unrecognized tax benefits
in current and non-current taxes payable, respectively, on the consolidated balance sheet of which approximately $97.4 million
would impact the Company’s effective tax rate. At February 25, 2012, the Company has recorded approximately $1.4 million
and $123.6 million of gross unrecognized tax benefits in current and non-current taxes payable, respectively, on the
consolidated balance sheet of which approximately $123.3 million would impact the Company’s effective tax rate. As of
March 2, 2013 and February 25, 2012, the liability for gross unrecognized tax benefits included approximately $18.9 million
and $27.1 million, respectively, of accrued interest. The Company recorded a decrease of interest of approximately $4.9 million
and an increase of interest of approximately $2.3 million for the years ended March 2, 2013 and February 25, 2012,
respectively, for gross unrecognized tax benefits in the consolidated statement of earnings.
The Company anticipates that any adjustments to gross unrecognized tax benefits which will impact income tax expense, due
to the expiration of statutes of limitations, could be approximately $17.0 to $18.0 million in the next twelve months. However,
actual results could differ from those currently anticipated.
As of March 2, 2013, the Company operated in all 50 states, the District of Columbia, Puerto Rico, Canada and several other
international countries and files income tax returns in the United States and various state, local and international jurisdictions.
The Company is currently under examination by the Internal Revenue Service for tax years 2009 through 2011. The Company is
also open to examination for state and local jurisdictions with varying statutes of limitations, generally ranging from three to
five years.
For fiscal 2012, 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 2.93%, provision for uncertain tax positions of 0.07% and other income tax benefits of 1.50%.
For fiscal 2011, 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 2.90%, provision for uncertain tax positions of 0.23% and other income tax benefits of 1.13%.
For fiscal 2010, 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 2.77%, provision for uncertain tax positions of 1.86% and other income tax benefits of 0.83%.
8. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
In fiscal 2002, the Company had an interest in certain life insurance policies on the lives of its Co-Chairmen and their spouses.
The Company’s interest in these policies was equivalent to the net premiums paid by the Company. The agreements relating to
the Company’s interest in the life insurance policies on the lives of its Co-Chairmen and their spouses were terminated in fiscal
2003. Upon termination in fiscal 2003, the Co-Chairmen paid to the Company $5.4 million, representing the total amount of
premiums paid by the Company under the agreements and the Company was released from its contractual obligation to make
substantial future premium payments. In order to confer a benefit to its Co-Chairmen in substitution for the aforementioned
terminated agreements, the Company has agreed to pay to the Co-Chairmen, at a future date, an aggregate amount of $4.2
million, which is included in accrued expenses and other current liabilities as of March 2, 2013 and February 25, 2012.
9. LEASES
The Company leases retail stores, as well as distribution facilities, offices and equipment, under agreements expiring at various
dates through 2041. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
BED BATH & BEYOND 2012 ANNUAL REPORT
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