Emerson 2008 Annual Report Download - page 52

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A Powerful Force for Innovation [ 45 ]
The principal components of income tax expense follow:
   2006 2007 2008
Current:
Federal $394 606 539
State and local 57 58 50
Non-U.S. 310 364 496
Deferred:
Federal 73 (4) 65
State and local 8 (14) (5)
Non-U.S. (8) (46) (8)
Income tax expense $834 964 1,137
The federal corporate statutory rate is reconciled to the Company’s effective income tax rate as follows:
   2006 2007 2008
Federal corporate statutory rate 35.0% 35.0% 35.0%
State and local taxes, less federal tax benefit 1.6 0.9 0.8
Non-U.S. rate differential (3.4) (4.1) (4.2)
Non-U.S. tax holidays (1.6) (1.3) (0.9)
Export benefit (0.8) (0.2) –
U.S. manufacturing deduction (0.4) (0.4) (0.8)
Other 0.8 1.3 1.8
Effective income tax rate 31.2% 31.2% 31.7%
Non-U.S. tax holidays reduce the tax rate in certain foreign jurisdictions, the majority of which are expected to expire
over the next three years.
The principal items that gave rise to deferred income tax assets and liabilities follow:
    2007 2008
Deferred tax assets:
Accrued liabilities $ 195 189
Employee compensation and benefits 193 146
Postretirement and postemployment benefits 174 170
NOL and tax credits 261 249
Capital loss benefit 47 18
Other 110 152
Total $ 980 924
Valuation allowance $(166) (146)
Deferred tax liabilities:
Intangibles $(413) (437)
Property, plant and equipment (244) (221)
Pension (121) (94)
Leveraged leases (96) (79)
Other (105) (53)
Total $(979) (884)
Net deferred income tax liability $(165) (106)