Nordstrom 2011 Annual Report Download - page 59

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Nordstrom, Inc. and subsidiaries 59
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
Following is a summary of performance share unit activity:
Fiscal year 2011
Outstanding, beginning of year 199,186
Granted 60,934
Vested but unearned -
Vested and earned (132,752)
Cancelled -
Outstanding, end of year 127,368
Total fair value of performance share units earned $6
Total fair value of performance share units settled
or to be settled in cash $6
As of January 28, 2012, our other liabilities included $7 for performance share units. As of January 28, 2012, the remaining unrecognized stock-based
compensation expense for unvested performance share units was $2, which is expected to be recognized over a weighted-average period of
24 months.
NOTE 14: INCOME TAXES
Income tax expense consists of the following:
Fiscal year 2011 2010 2009
Current income taxes:
Federal $359 $324 $275
State and local 63 52 38
Total current income tax expense 422 376 313
Deferred income taxes:
Current 7 2 (28)
Non–current 7 - (30)
Total deferred income tax expense (benefit) 14 2 (58)
Total income tax expense $436 $378 $255
A reconciliation of the statutory Federal income tax rate to the effective tax rate on earnings before income taxes is as follows:
Fiscal year 2011 2010 2009
Statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal
income taxes 3.6 3.4 3.5
Non–taxable acquisition–related items 0.6 - -
Deferred tax adjustment – - (1.8)
Permanent differences 0.1 (0.2) (0.6)
Other, net (0.3) - 0.5
Effective tax rate 39.0% 38.2% 36.6%
In 2009, the IRS completed its routine examination of our federal filings for 2007. As a result of adjustments identified in the IRS examinations
and revisions of estimates, we increased our deferred tax assets, which resulted in a reduction in our effective tax rate in 2009.
In 2011, we acquired HauteLook in a tax-free merger transaction. The non-taxability of certain acquisition-related items, including goodwill
impairment, resulted in an increase in our effective tax rate in 2011.