Big Lots 2012 Annual Report Download - page 148

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 9 — Income Taxes (Continued)
We have the following income tax loss and credit carryforwards at February 2, 2013 (amounts are shown net of
tax excluding the federal income tax effect of the state and local items):
(In thousands)
Non-U.S.:
Net operating loss carryforwards .................. $22,098 Expires fiscal years 2026 through 2032
U.S. State and local:
State net operating loss carryforwards .............. 574 Expires fiscal years 2020 through 2025
California enterprise zone credits.................. 5,182 No expiration date
Texas business loss credits....................... 275 Expires fiscal years through 2025
Total income tax loss and credit carryforwards .... $28,129
Income taxes payable on our consolidated balance sheets have been reduced by the tax benefits primarily
associated with share-based compensation. We receive an income tax deduction upon the exercise of non-
qualified stock options and the vesting of restricted stock. Tax benefits of $8.1 million, $2.7 million, and $13.8
million in 2012, 2011, and 2010, respectively, were credited directly to shareholders’ equity related to share-
based compensation deductions in excess of expense recognized for these awards.
The Company’s Canadian subsidiary has an accumulated retained deficit, thus we have not provided for income
taxes in the United States on undistributed earnings.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2012, 2011, and
2010:
2012 2011 2010
(In thousands)
Unrecognized tax benefits - opening balance ...................... $16,755 $27,250 $35,824
Gross increases - tax positions in current year ........................ 838 2,179 1,127
Gross increases - tax positions in prior period ........................ 1,626 616 1,237
Gross decreases - tax positions in prior period ........................ (1,928) (9,513) (1,190)
Settlements ................................................... (382) (2,581) (9,121)
Lapse of statute of limitations ..................................... (890) (1,196) (627)
Unrecognized tax benefits - end of year .......................... $16,019 $16,755 $27,250
At the end of 2012 and 2011, the total amount of unrecognized tax benefits that, if recognized, would affect
the effective income tax rate is $10.8 million and $11.0 million, respectively, after considering the federal tax
benefit of state and local income taxes of $4.6 million and $4.9 million respectively. Unrecognized tax benefits
of $0.7 million and $0.9 million, respectively, relate to tax positions for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility. The uncertain timing
items could result in the acceleration of the payment of cash to the taxing authority to an earlier period.
For 2011, unrecognized tax benefits decreased by approximately $9.1 million related to our claims for welfare
to work and work opportunity credits, which claims have either lapsed or are unlikely to be realized due to an
unfavorable decision of U.S. Court of Appeals for the Federal Circuit against a similarly situated taxpayer. Our
right to file a refund claim with respect to approximately $4.9 million of the credits has lapsed and our right
to file a refund claim with respect to approximately $2 million of the credits will lapse during fiscal 2014. Our
right to file a refund claim with respect to approximately $2.2 million of the credits may never lapse because the
IRS has not issued a statutory notice of disallowance with respect to those claims; however, because our claims
are unlikely to prevail in a different jurisdiction, we have decided not to pursue them. Therefore, we reduced our
unrecognized tax benefits by the entire amount of the claims. Because these benefits were unrecognized, the
decrease had no effect on income tax expense.