ADT 2014 Annual Report Download - page 150
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FORM 10-K
The reconciliation between the actual effective tax rate on continuing operations and the statutory U.S.
federal income tax rate for fiscal years 2014, 2013 and 2012 is as follows:
2014 2013 2012
Federal statutory tax rate .................................. 35.0 % 35.0 % 35.0 %
Increases (reductions) in taxes due to:
U.S. state income tax provision, net ..................... 4.2% 3.5% 3.4%
Non-U.S. net earnings ................................ (0.5)% (0.5)% (0.6)%
Trademark amortization .............................. (5.3)% (3.6)% — %
Nondeductible charges ............................... — % (1.0)% — %
Resolution of unrecognized tax benefits .................. (6.5)% — % — %
2005-2009 IRS adjustments ........................... 3.7% — % — %
Other ............................................. (1.0)% 1.0 % (0.3)%
Provision for income taxes ................................ 29.6 % 34.4 % 37.5 %
Deferred income taxes result from temporary differences between the amount of assets and liabilities
recognized for financial reporting and tax purposes.
The components of the Company’s net deferred income tax liability as of September 26, 2014 and
September 27, 2013 are as follows ($ in millions):
September 26,
2014
September 27,
2013
Deferred tax assets:
Accrued liabilities and reserves ................ $ 35 $ 37
Tax loss and credit carryforwards .............. 1,023 1,114
Postretirement benefits ....................... 14 15
Deferred revenue ........................... 167 161
Other ..................................... 13 10
$ 1,252 $ 1,337
Deferred tax liabilities:
Property and equipment ...................... (34) (16)
Subscriber system assets ..................... (633) (600)
Intangible assets ............................ (1,111) (1,052)
Other ..................................... (10) (12)
$(1,788) $(1,680)
Net deferred tax liability before valuation
allowance ............................... (536) (343)
Valuation allowance ......................... (2) (2)
Net deferred tax liability ..................... $ (538) $ (345)
The net deferred tax liability increased primarily due to accelerated depreciation and amortization and
current year net operating loss (“NOL”) utilization.
The valuation allowance for deferred tax assets of $2 million as of September 26, 2014 and September 27,
2013, relates to the uncertainty of the utilization of certain state and U.S. deferred tax assets. The Company
believes that it is more likely than not that it will generate sufficient future taxable income to realize the tax
benefits related to its remaining deferred tax assets, including credit and NOL carryforwards, on the Company’s
Consolidated Balance Sheet.
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