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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-21
Changes in workers’ compensation and general liability reserves, including the current portion, are as follows:
2011 2010 2009
(millions)
Balance, beginning of year.............................................................................. $ 488 $ 478 $ 495
Charged to costs and expenses........................................................................ 144 148 124
Payments, net of recoveries ............................................................................ (139)(138)(141)
Balance, end of year........................................................................................ $ 493 $ 488 $ 478
The non-current portion of workers’ compensation and general liability reserves is included in other liabilities on the
Consolidated Balance Sheets. At January 28, 2012 and January 29, 2011, workers’ compensation and general liability reserves
included $98 million and $93 million, respectively, of liabilities which are covered by deposits and receivables included in
current assets on the Consolidated Balance Sheets.
9. Taxes
Income tax expense is as follows:
2011 2010 2009
Current Deferred Total Current Deferred Total Current Deferred Total
(millions)
Federal................................. $ 519 $ 144 $ 663 $ 217 $ 234 $ 451 $ 48 $ 84 $ 132
State and local...................... 43 6 49 12 10 22 9 37 46
$ 562 $ 150 $ 712 $ 229 $ 244 $ 473 $ 57 $ 121 $ 178
The income tax expense reported differs from the expected tax computed by applying the federal income tax statutory
rate of 35% for 2011, 2010 and 2009 to income before income taxes. The reasons for this difference and their tax effects are as
follows:
2011 2010 2009
(millions)
Expected tax.................................................................................................... $ 689 $ 462 $ 177
State and local income taxes, net of federal income tax benefit..................... 31 14 30
Settlement of federal tax examinations........................................................... — — (21)
Other................................................................................................................ (8)(3)(8)
$ 712 $ 473 $ 178
The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program ("CAP"). As part of
the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax
return. The IRS has completed examinations of the 2010, 2009 and 2008 tax years. During the fourth quarter of 2009, the
Company settled IRS examinations for fiscal years 2007 and 2006. As a result of the settlement, the Company recognized
previously unrecognized tax benefits and related accrued interest, primarily attributable to the disposition of former
subsidiaries.