Urban Outfitters 2012 Annual Report Download - page 74

Table of Contents
URBAN OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data)
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
January 31,
2012 2011 2010
Balance at the beginning of the period $ 7,758 $ 7,532 $ 7,509
Increases in tax positions for prior years 3,466 43 948
Decreases in tax positions for prior years (310) (592) (116)
Increases in tax positions for current year 360 1,000 1,894
Settlements (2,259) (40) (924)
Lapse in statute of limitations (351) (185) (1,779)
Balance at the end of the period $ 8,664 $ 7,758 $ 7,532
The total amount of net unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate were $3,874 and $6,677 at
January 31, 2012 and 2011 respectively. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the
Consolidated Statements of Income, which is consistent with the recognition of these items in prior reporting periods. During the years ended January 31,
2012, 2011 and 2010, the Company recognized a benefit of $1,334, $437 and $427 in interest and penalties. The Company accrued $2,529 and $3,620 for the
payment of interest and penalties as of January 31, 2012 and 2011, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. During the year ended January 31,
2012, the Company settled its Internal Revenue Service examination for the periods ended January 31, 2005 through 2008. The Company has recognized the
tax effect of this settlement for previous and future periods in the end of year balances. The Company also began a new Internal Revenue audit for periods
ended January 31, 2009 and 2010. State and foreign jurisdictions that remain subject to examination range from fiscal 2002 to 2011 with few exceptions. It is
possible that the Federal or any state examination may be resolved within twelve months. Due to the potential for resolution of Federal audit and state
examinations, and the expiration of various statutes of limitation, it is possible that the Company's gross unrecognized tax benefits balance may change within
the next twelve months by a range of zero to $3,340.
9. Share-Based Compensation
The Company's 2008 and 2004 Stock Incentive Plans each authorize up to 10,000,000 common shares, which can be granted as RSU's, unrestricted
shares, incentive stock options, nonqualified stock options, PSU's or as SAR's. Awards under these plans generally expire seven or ten years from the date of
grant, thirty days after termination of employment or six months after the date of death or termination due to disability of the grantee. As of January 31, 2012
there were 6,951,650 and 902,516 common shares available to grant under the 2008 and 2004 Stock Incentive Plans, respectively.
A Lattice Binomial pricing model ("Model") was used to estimate the fair value of stock options and SAR's. The Model allows for assumptions such as
the risk-free rate of interest, volatility and
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