Saks Fifth Avenue 2010 Annual Report Download - page 68

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SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The Company made income tax payments, net of income tax refunds received of $2,191 during 2010. The
Company received income tax refunds of $4,727 and $10,214 during 2009 and 2008, respectively.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows:
January 29,
2011
January 30,
2010
January 31,
2009
Balance at beginning of year ..................................... $40,358 $46,031 $47,648
Gross amount of increases for tax positions of prior years .......... 3,230 1,111 505
Gross amount of decreases for tax positions of prior years .......... (165) — (761)
Gross amount of decreases due to statute expirations .............. (28,860) (6,656) (1,256)
Gross amount of decreases due to tax settlements ................. (309) (128) (105)
Balance at end of year ........................................... $14,254 $40,358 $46,031
The Company analyzed its positions related to the reserve for tax exposures and determined that the amount
was adequate. The Company will continue to analyze its positions related to the reserve for tax exposures on an
ongoing basis. At January 29, 2011, $7,780 represents the amount of unrecognized tax benefits that, if
recognized, would impact the effective income tax rate in future periods. The Company continually evaluates its
tax filing positions and to the extent the Company prevails on audits or statutes of limitation expire, the
unrecognized tax benefits could be realized.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax
expense. During the years ended January 29, 2011, January 30, 2010, and January 31, 2009, the Company
recognized $(1,391), $(63), and $1,688, respectively in interest and penalties, net of related tax effects. The
Company had accrued $3,614, $5,005, and $5,115 for the payment of interest and penalties as of January 29,
2011, January 30, 2010, and January 31, 2009, respectively.
The Company files a consolidated U.S. federal income tax return as well as state tax returns in multiple state
jurisdictions. The Company has completed examinations by the Internal Revenue Service or the statute of
limitations has expired for taxable years through February 3, 2007. With respect to the state and local
jurisdictions, the Company has completed examinations in many jurisdictions through the same period and
beyond and currently has examinations in progress for several jurisdictions.
F-18