Kohl's 2014 Annual Report Download - page 54

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tax years are subject to state examination. The earliest open period is 2003. Certain states have proposed adjustments which we are currently appealing. If we
do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position.
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
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Balance at beginning of year  
$ 108
Increases due to:
Tax positions taken in prior years 
6
Tax positions taken in current year 
21
Decreases due to:
Tax positions taken in prior years 
(4)
Settlements with taxing authorities 
(3)
Lapse of applicable statute of limitations 
(3)
Balance at end of year  
$ 125
Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $23 million at January 31,
2015 and $21 million at February 1, 2014. Interest and penalty expense was $2 million for 2014 and $3 million for 2013.
Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $89 million as of January 31, 2015 and $88 million as of
February 1, 2014.
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.
We have both payables and receivables recorded on our balance sheet for current income taxes. The receivables are recorded within other current assets
in our balance sheet. The total of the receivables was $25 million as of January 31, 2015. To conform to the current year presentation, we have reclassed $22
million from income taxes payable to other current assets for February 1, 2014.
To conform to the current year presentation on our balance sheet, we have reclassed $43 million of the federal income taxes receivable related to state
tax reserves and interest from long-term other assets to deferred income taxes on the balance sheet.
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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, performance share units and options to purchase shares of our common stock, to officers,
key employees and directors. As of January 31, 2015, there were 18.5 million shares authorized and 11.5 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 typically vest in five equal annual installments. 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.
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