Ross 2014 Annual Report Download - page 55

The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest and penalties) at fiscal
2014, 2013, and 2012 are as follows:
($000) 2014 2013 2012
Unrecognized tax benefits — beginning of year $ 80,323 $ 65,667 $ 56,524
Gross increases:
Tax positions in current period 15,441 15,591 11,009
Tax positions in prior period — 2,418 4,167
Gross decreases:
Tax positions in prior periods (9,432) (519) (1,476 )
Lapse of statute limitations (5,732) ( 2,274 ) (1,312 )
Settlements (2,484) (560) (3,245)
Unrecognized tax benefits — end of year $ 78,116 $ 80,323 $ 65,667
At the end of fiscal 2014, 2013, and 2012, the reserves for unrecognized tax benefits were $101.7 million, $104.9 million,
and $82.5 million inclusive of $23.6 million, $24.6 million, and $16.8 million of related interest and penalties, 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, $51.0 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 $6.3 million.
The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2011
through 2014. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for
fiscal years 2010 through 2014. 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 $11.4 million, $10.4 million, and $9.4 million in fiscal 2014, 2013, and 2012, 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 $94.1 million
and $88.3 million at January 31, 2015 and February 1, 2014, 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 $94.1 million and $88.3 million at January 31, 2015 and February 1, 2014, respectively, included in Other long-
term liabilities in the Consolidated Balance Sheets.
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