Taxes On Earnings

12 Months Ended

Feb. 01, 2014

Income Tax Disclosure [Abstract]

Taxes On Earnings

Taxes on Earnings

The provision for income taxes consisted of the following:

($000)	2013			2012			2011
Current
Federal	$	486,203		$	485,882		$	343,550
State	35,053			31,227			30,702
	521,256			517,109			374,252
Deferred
Federal	(11,055		)	(37,178		)	25,383
State	(4,195		)	(1,850		)	(3,661		)
	(15,250		)	(39,028		)	21,722
Total	$	506,006		$	478,081		$	395,974

In fiscal 2013, 2012, and 2011, the Company realized tax benefits of $27.7 million, $30.0 million and $19.0 million, respectively, related to employee equity programs that were credited to additional paid-in capital.

The provision for taxes for financial reporting purposes is different from the tax provision computed by applying the statutory federal income tax rate. The differences are reconciled below:

	2013		2012		2011
Federal income taxes at the statutory rate	35	%	35	%	35	%
State income taxes (net of federal benefit) and other, net	3	%	3	%	3	%
Total	38	%	38	%	38	%

The components of deferred income taxes at February 1, 2014 and February 2, 2013 are as follows:

($000)	2013			2012
Deferred Tax Assets
Accrued liabilities	$	87,835		$	72,266
Deferred compensation	31,034			28,040
Stock-based compensation	33,048			28,781
Deferred rent	17,888			16,984
California franchise taxes	16,479			13,376
Employee benefits	16,177			18,315
Other	4,992			3,686
	207,453			181,448
Deferred Tax Liabilities
Depreciation	(212,383		)	(210,343		)
Merchandise inventory	(28,558		)	(18,802		)
Supplies	(10,730		)	(9,766		)
Prepaid expenses	(4,426		)	(6,431		)
	(256,097		)	(245,342		)
Net Deferred Tax Liabilities	$	(48,644	)	$	(63,894	)
Classified as:
Current net deferred tax asset	$	10,227		$	20,407
Long-term net deferred tax liability	(58,871		)	(84,301		)
Net Deferred Tax Liabilities	$	(48,644	)	$	(63,894	)

The changes in amounts of unrecognized tax benefits (gross of federal tax benefits and excluding interest and penalties) at fiscal 2013, 2012, and 2011 are as follows:

($000)	2013			2012			2011
Unrecognized tax benefits - beginning of year	$	65,667		$	56,524		$	43,990
Gross increases:
Tax positions in current period	15,591			11,009			9,245
Tax positions in prior period	2,418			4,167			12,193
Gross decreases:
Tax positions in prior periods	(519		)	(1,476		)	(4,491		)
Lapse of statute limitations	(2,274		)	(1,312		)	(682		)
Settlements	(560		)	(3,245		)	(3,731		)
Unrecognized tax benefits - end of year	$	80,323		$	65,667		$	56,524

At the end of fiscal 2013, 2012, and 2011, the reserves for unrecognized tax benefits were $104.9 million, $82.5 million, and $72.4 million inclusive of $24.6 million, $16.8 million, and $15.9 million of related interest and penalties, respectively. The Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for taxes on earnings. If recognized, $49.9 million would impact the Company’s effective tax rate. The difference between the total amount of unrecognized tax benefits and the amounts that would impact the effective tax rate relates to amounts attributable to deferred income tax assets and liabilities. These amounts are net of federal and state income taxes.

During the next twelve months, it is reasonably possible that the statute of limitations may lapse pertaining to positions taken by the Company in prior year tax returns. If this occurs, the total amount of unrecognized tax benefits may decrease, reducing the provision for taxes on earnings by up to $4.8 million.

The Company is generally open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2010 through 2013. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2009 through 2013. Certain state tax returns are currently under audit by state tax authorities. The Company does not expect the results of these audits to have a material impact on the consolidated financial statements.