ADT 2006 Annual Report Download - page 179
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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Income Taxes
Significant components of income tax provision for each year are as follows ($ in millions):
2005 2004
2006 (Restated) (Restated)
Current:
United States:
Federal ................................ $(157) $ 630 $ 504
State ................................. (50) 66 9
Non-U.S. ................................ 744 728 507
Current income tax provision ................. 537 1,424 1,020
Deferred:
United States:
Federal ................................ 408 (227) 14
State ................................. 36 4 31
Non-U.S. ................................ (182) (89) 47
Deferred income tax provision ................. 262 (312) 92
$ 799 $1,112 $ 1,112
Non-U.S. income from continuing operations before income taxes was $3,560 million,
$2,516 million and $3,340 million for 2006, 2005 and 2004, respectively.
The reconciliation between U.S. federal income taxes at the statutory rate and the Company’s
provision for income taxes on continuing operations for the years ended September 29, 2006, and
September 30, 2005 and 2004 is as follows ($ in millions):
2005 2004
2006 (Restated) (Restated)
Notional U.S. federal income tax expense at the
statutory rate ............................ $1,709 $1,458 $1,398
Adjustments to reconcile to the income tax provision:
U.S. state income tax (benefit) provision, net ..... 46 48 40
Asset impairments ......................... 22 (109) (19)
Non-U.S. net earnings(1) .................... (557) (577) (651)
Nondeductible charges ...................... 34 321 289
Valuation allowance ........................ (187) (284) (6)
Loss on retirement of debt ................... (243) 354 98
Other .................................. (25) (99) (37)
Provision for income taxes ................... $ 799 $1,112 $1,112
(1) Excludes asset impairments, nondeductible charges, and other items which are broken out separately in the table.
Included in non-deductible charges for 2006 is a $127 million favorable adjustment related to a
correction to 2005 tax reserves on legacy tax matters and a $31 million unfavorable adjustment
associated with proposed corrections to prior period income tax returns. Included in loss on retirement
of debt in 2006 is a cumulative one-time benefit of $243 million associated with the receipt of a
2006 Financials 117