Ross 2009 Annual Report Download - page 52

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The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest) at fiscal 2009, 2008,
and 2007 are as follows:
($000) 2009 2008 2007
Unrecognized tax benefits — beginning of year $ 26,338 $ 23,218 $ 25,680
Gross increases:
Tax positions in current period 7,314 4,695 5,451
Tax positions in prior period 2,308 3,658 1,486
Gross decreases:
Tax positions in prior periods — (1,115) (6,352)
Lapse of statute limitations (1,731) (1,783) (3,004)
Settlements (880) (2,335) (43)
Unrecognized tax benefits — end of year $ 33,349 $ 26,338 $ 23,218
In fiscal 2009, 2008, and 2007, the reserves for unrecognized tax benefits (net of federal tax benefits) were $33.6 million,
$26.0 million, and $23.2 million inclusive of $10.0 million, $6.5 million, and $5.6 million of related interest, respectively. The
Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for taxes on
earnings. If recognized, $26.9 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. If this occurs, the total amount of unrecognized tax benefits may decrease, reducing the
provision for taxes on earnings by up to $2.3 million.
The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2006
through 2009. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for
fiscal years 2005 through 2009. Certain state tax returns are currently under audit by state tax authorities. The Company does
not expect the results 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 $7.6 million, $7.3 million, and $6.8 million in fiscal 2009, 2008, and 2007, respectively.
The Company also has an Incentive Compensation Plan, which provides cash awards to key management and 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 $50.7 million
and $37.3 million at January 30, 2010 and January 31, 2009, respectively, of long-term plan investments, at market value,
set aside or designated for the Non-qualified Deferred Compensation Plan (See Note B). 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 $50.7 million and $37.3 million at January 30, 2010 and January 31, 2009, respectively, included in other long-
term liabilities in the consolidated balance sheets.