Macy's 2012 Annual Report Download - page 69
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-22
Changes in workers’ compensation and general liability reserves, including the current portion, are as follows:
2012 2011 2010
(millions)
Balance, beginning of year.............................................................................. $ 493 $ 488 $ 478
Charged to costs and expenses........................................................................ 157 144 148
Payments, net of recoveries ............................................................................ (153)(139)(138)
Balance, end of year........................................................................................ $ 497 $ 493 $ 488
The non-current portion of workers’ compensation and general liability reserves is included in other liabilities on the
Consolidated Balance Sheets. At February 2, 2013 and January 28, 2012, workers’ compensation and general liability reserves
included $103 million and $98 million, respectively, of liabilities which are covered by deposits and receivables included in
current assets on the Consolidated Balance Sheets.
8. Taxes
Income tax expense is as follows:
2012 2011 2010
Current Deferred Total Current Deferred Total Current Deferred Total
(millions)
Federal................................. $ 697 $ 2 $ 699 $ 519 $ 144 $ 663 $ 217 $ 234 $ 451
State and local...................... 70 (2) 68 43 6 49 12 10 22
$ 767 $ — $ 767 $ 562 $ 150 $ 712 $ 229 $ 244 $ 473
The income tax expense reported differs from the expected tax computed by applying the federal income tax statutory
rate of 35% for 2012, 2011 and 2010 to income before income taxes. The reasons for this difference and their tax effects are as
follows:
2012 2011 2010
(millions)
Expected tax.................................................................................................... $ 736 $ 689 $ 462
State and local income taxes, net of federal income tax benefit..................... 45 31 14
Settlement of federal tax examinations........................................................... — — —
Other................................................................................................................ (14)(8)(3)
$ 767 $ 712 $ 473
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 2011 and all prior tax years.