Ross 2008 Annual Report Download - page 50

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In fiscal 2008 and 2007, the reserves for unrecognized tax benefits (net of federal tax benefits) were $26.0 million and $23.2
million inclusive of $6.5 million and $5.6 million of related interest, respectively. The Company adopted a new tax method
of accounting which reduced its reserve during fiscal 2007. The Company accounts for interest and penalties related to
unrecognized tax benefits as a part of its provision for taxes on earnings. If recognized, $19.2 million would impact the
Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amounts that would
impact the effective tax rate relates to amounts attributable to deferred income tax assets and liabilities. These amounts are net
of federal and state income taxes.
During the next twelve months, it is reasonably possible that the statute of limitations may lapse pertaining to positions taken by
the Company in prior year tax returns. As a result, the total amount of unrecognized tax benefits may decrease, which would
reduce the provision for taxes on earnings by up to $1.5 million, net of federal tax benefits.
The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2005
through 2008. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for
fiscal years 2004 through 2008. Certain state tax returns are currently under audit by state tax authorities. The Company does
not expect the result of these audits to have a material impact on the consolidated financial statements.
Note G: Employee Benefit Plans
The Company has a defined contribution plan that is available to certain employees. Under the plan, employee and Company
contributions and accumulated plan earnings qualify for favorable tax treatment under Section 401(k) of the Internal Revenue
Code. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code.
The Company matches up to 4% of the employee’s salary up to the plan limits. Company matching contributions to the 401(k)
plan were $7.3 million, $6.8 million and $6.1 million in fiscal 2008, 2007 and 2006, respectively.
The Company also has an Incentive Compensation Plan, which provides cash awards to key management employees based on
Company and individual performance.
The Company also makes available to management a Non-qualified Deferred Compensation Plan which allows management
to make payroll contributions on a pre-tax basis in addition to the 401(k) plan. Other long-term assets include $37.3 million
and $48.2 million at January 31, 2009 and February 2, 2008, respectively, of long-term investments, at market value, set aside
or designated for the Non-qualified Deferred Compensation Plan. Plan investments are designated by the participants, and
investment returns are not guaranteed by the Company. The Company has a corresponding liability to participants of $37.3
million and $48.2 million at January 31, 2009 and February 2, 2008, respectively, included in other long-term liabilities in the
consolidated balance sheets.
In addition, the Company has certain individuals who receive or will receive post-employment benefits. The estimated liability
for these benefits of $4.3 million and $3.2 million is included in accrued liabilities and other in the accompanying consolidated
balance sheets as of January 31, 2009 and February 2, 2008, respectively.