Kohl's 2012 Annual Report Download - page 55

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-16
6. Income Taxes (continued)
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
2012 2011
(In Millions)
Balance at beginning of year........................................................................................... $ 101 $ 96
Increases due to:
Tax positions taken in prior years............................................................................. 18
Tax positions taken in current year........................................................................... 22 24
Decreases due to:
Tax positions taken in prior years............................................................................. (9)(9)
Settlements with taxing authorities .......................................................................... (1)(12)
Lapse of applicable statute of limitations................................................................. (6)(6)
Balance at end of year ..................................................................................................... $ 108 $ 101
Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties
of $18 million at February 2, 2013 and $17 million at January 28, 2012. Interest and penalty expense was $1 million for 2012
and $4 million for 2011.
Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $75 million as of February
2, 2013 and $69 million as of January 28, 2012.
It is reasonably possible that our unrecognized tax positions may change within the next 12 months, primarily as a result
of ongoing audits. While it is possible that one or more of these examinations may be resolved in the next year, it is not
anticipated that a significant impact to the unrecognized tax benefit balance will occur.
7. Stock-Based Compensation
We currently grant share-based compensation pursuant to the Kohl’s Corporation 2010 Long-Term Compensation Plan,
which provides for the granting of various forms of equity-based awards, including nonvested stock and options to purchase
shares of our common stock, to officers, key employees and directors. As of February 2, 2013, there were 18.5 million shares
authorized and 13.9 million shares available for grant under the 2010 Long-Term Compensation Plan. Options and nonvested
stock that are surrendered or terminated without issuance of shares are available for future grants.
Annual grants of stock options and nonvested stock are typically made in the first quarter of the fiscal year. Grants to
newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the
year. We also have outstanding options which were granted under previous compensation plans.
Stock options
The majority of stock options granted to employees since 2009 vest in five equal annual installments and the majority of
stock options granted to employees prior to 2009 vest in four equal annual installments. Outside directors’ stock options are
typically granted upon a director’s election or re-election to our Board of Directors and vest over the term to which the director
was elected, generally one year. Outstanding options granted to employees after 2005 have a term of seven years. Outstanding
options granted to employees prior to 2006 have a term of up to 15 years. Options granted to directors have a term of 10 years.