Lowe's 2012 Annual Report Download - page 66

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The components of the income tax provision are as follows:
(In millions) 2012 2011 2010
Current:
Federal .............................................................................................. $ 1,162 $ 891 $ 1,171
State .................................................................................................. 155 124 188
Total current ...................................................................................... 1,317 1,015 1,359
Deferred:
Federal .............................................................................................. (133) 50 (117)
State .................................................................................................. (6) 2 (24)
Total deferred..................................................................................... (139) 52 (141)
Total income tax provision ................................................................ $ 1,178 $ 1,067 $ 1,218
The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:
February 1,
2013
February 3,
2012 (In millions)
Deferred tax assets:
Self-insurance ................................................................................................. $ 375 $ 316
Share-based payment expense ........................................................................ 73 105
Deferred rent .................................................................................................. 80 80
Net operating losses ....................................................................................... 131 100
Other, net ........................................................................................................ 113 121
Total deferred tax assets .................................................................................. 772 722
Valuation allowance .......................................................................................... (142) (101)
Net deferred tax assets ..................................................................................... 630 621
Deferred tax liabilities:
Property .......................................................................................................... (783) (903)
Other, net ........................................................................................................ (85) (66)
Total deferred tax liabilities ............................................................................ (868) (969)
Net deferred tax liability ................................................................................. $ (238) $ (348)
The Company operates as a branch in various foreign jurisdictions and cumulatively has incurred net operating losses of
$474 million and $379 million as of February 1, 2013, and February 3, 2012, respectively. The net operating losses are
subject to expiration in 2017 through 2032. Deferred tax assets have been established for these foreign net operating losses
in the accompanying consolidated balance sheets. Given the uncertainty regarding the realization of foreign net deferred
tax assets, the Company recorded cumulative valuation allowances of $142 million and $101 million at February 1, 2013,
and February 3, 2012, respectively.
The Company has not provided for deferred income taxes on approximately $36 million of undistributed earnings of
international subsidiaries because of its intention to indefinitely reinvest these earnings outside the U.S. It is not practicable
to determine the income tax liability that would be payable on these earnings.
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
(In millions) 2012 2011 2010
Unrecognized tax benefits, beginning of year .....................................
$
146
$
165
$
154
Additions for tax positions of prior years ............................................ 20 11 22
Reductions for tax positions of prior years .......................................... (3) (19) (19)
Additions based on tax positions related to the current year ................ - 19 9
Settlements ........................................................................................... (100) (30) (1)
Unrecognized tax benefits, end of year ................................................
$
63
$
146
$
165