Macy's 2009 Annual Report Download - page 77

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Changes in workers’ compensation and general liability reserves, including the current portion, are as
follows:
2009 2008 2007
(millions)
Balance, beginning of year ................................................ $495 $471 $487
Charged to costs and expenses ............................................. 124 164 131
Payments, net of recoveries ................................................ (141) (140) (147)
Balance, end of year ..................................................... $478 $495 $471
The non-current portion of workers’ compensation and general liability reserves is included in other
liabilities on the Consolidated Balance Sheets. At January 30, 2010 and January 31, 2009, workers’
compensation and general liability reserves included $90 million of liabilities which are covered by deposits and
receivables included in current assets on the Consolidated Balance Sheets.
Other in the foregoing Accounts Payable and Accrued Liabilities table, at January 31, 2009, included $25
million for the settlement of a wage and hour class action in California, which was paid in February 2009.
13. Taxes
Income tax expense is as follows:
2009 2008 2007
Current Deferred Total Current Deferred Total Current Deferred Total
(millions)
Federal ................... $48 $ 96 $144 $ 6 $(123) $(117) $370 $(10) $360
State and local ............. 9 4 13 8 (26) (18) 53 (2) 51
$57 $100 $157 $14 $(149) $(135) $423 $(12) $411
The income tax expense reported differs from the expected tax computed by applying the federal income tax
statutory rate of 35% for 2009, 2008 and 2007 to income (loss) from continuing operations before income taxes.
The reasons for this difference and their tax effects are as follows:
2009 2008 2007
(millions)
Expected tax ............................................................ $177 $(1,728) $462
State and local income taxes, net of federal income tax benefit ..................... 9 (12) 36
Settlement of federal tax examinations ........................................ (21) – (78)
Non-deductibility of goodwill impairment charges .............................. – 1,611 –
Other .................................................................. (8) (6) (9)
$157 $ (135) $411
During the fourth quarter of 2009, the Company settled Internal Revenue Service (“IRS”) examinations for
fiscal years 2008, 2007 and 2006. As a result of the settlement, the Company recognized previously unrecognized
tax benefits and related accrued interest totaling $21 million, primarily attributable to the disposition of former
subsidiaries.
F-29