Bed, Bath and Beyond 2015 Annual Report Download - page 94

At February 27, 2016, the Company has recorded approximately $72.8 million of gross unrecognized tax benefits
in noncurrent income taxes payable on the consolidated balance sheet of which approximately $72.7 million
would impact the Company’s effective tax rate. At February 28, 2015, the Company has recorded approximately
$80.0 million of gross unrecognized tax benefits in noncurrent income taxes payable on the consolidated balance
sheet of which approximately $79.9 million would impact the Company’s effective tax rate. As of February 27,
2016 and February 28, 2015, the liability for gross unrecognized tax benefits included approximately $10.5
million and $13.0 million, respectively, of accrued interest. The Company recorded a decrease of interest of
approximately $2.5 million and $3.9 million, respectively, for the years ended February 27, 2016 and
February 28, 2015 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 $4 to $5 million in the next
twelve months. However, actual results could differ from those currently anticipated.
As of February 27, 2016, 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 open to examination for state and local jurisdictions with varying
statutes of limitations, generally ranging from three to five years.
For fiscal 2015, 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 3.07%, provision for uncertain tax positions of .07% and other income
tax benefits of 1.53%. For fiscal 2014, 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 3.01%, provision for uncertain tax positions of
0.04% and other income tax benefits of 1.72%. For fiscal 2013, 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 3.07%, benefit for
uncertain tax positions of 0.05% and other income tax benefits of 1.42%.
7. 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 February 27, 2016 and February 28, 2015.
8. LEASES
The Company leases retail stores, as well as distribution facilities, offices and equipment, under agreements
expiring at various dates through 2042. Certain leases provide for contingent rents (which are based upon store
sales exceeding stipulated amounts and are immaterial in fiscal 2015, 2014 and 2013), scheduled rent increases
and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and
common area maintenance charges.
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