Energizer 2007 Annual Report Download - page 31

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Energizer Holdings, Inc. 2007 Annual Report
4. Income Taxes
The provisions for income taxes consisted of the following for the
years ended September 30:
2007 2006 2005
Currently payable:
United States – Federal $ 86.4 $ 63.7 $ 71.4
State 5.0 3.6 5.3
Foreign 50.0 51.7 46.9
Total current 141.4 119.0 123.6
Deferred:
United States – Federal (25.3) (15.8) (12.3)
State (0.9) (0.6) (1.7)
Foreign (2.4) (6.9) (1.6)
Total deferred (28.6) (23.3) (15.6)
Provision for income taxes $112.8 $ 95.7 $108.0
The source of pre-tax earnings was:
2007 2006 2005
United States $183.1 $160.2 $150.6
Foreign 251.1 196.4 238.1
Pre-tax earnings $434.2 $356.6 $388.7
A reconciliation of income taxes with the amounts computed at the statutory federal rate follows:
2007 2006 2005
Computed tax at federal statutory rate $152.0 35.0% $124.8 35.0% $136.0 35.0%
State income taxes, net of federal tax benefit 2.7 0.6 1.9 0.5 3.0 0.8
Foreign tax less than the federal rate (22.7) (5.2) (17.7) (5.0) (27.4) (7.0)
Foreign benefits recognized related to
prior years’ losses (4.3) (1.0) (5.7) (1.6) (14.7) (3.8)
Adjustments to prior years’ tax accruals (7.9) (1.8) (10.9) (3.1) (10.6) (2.7)
Deferred tax benefits due to statutory rate change (9.7) (2.2) –– – –
Taxes on repatriation of foreign earnings
under provisions of the American Jobs
Creation Act –– –– 9.0 2.3
Other taxes on repatriation of foreign earnings 11.3 2.6 4.5 1.3 9.4 2.4
Non-taxable prepaid share option (PSO) (8.1) (1.9) (3.8) (1.0) (1.9) (0.5)
Other, net (0.5) (0.1) 2.6 0.7 5.2 1.3
Total $112.8 26.0% $ 95.7 26.8% $108.0 27.8%
In 2007, 2006 and 2005, $4.3, $5.7 and $14.7, respectively, of tax
benefits related to prior years’ losses were recorded. These benefits
related to foreign countries where our subsidiary subsequently
began to generate earnings and could reasonably expect future
profitability sufficient to utilize tax loss carryforwards prior to expi-
ration. Improved profitability in Mexico in 2007 and 2006 and
Germany in 2005 account for the bulk of the benefits recognized.
Adjustments were recorded in each of the three years to revise
previously recorded tax accruals to reflect refinement of tax attrib-
ute estimates to amounts in filed returns, settlement of tax audits
and changes in estimates related to uncertain tax positions in a
number of jurisdictions. Such adjustments decreased the income
tax provision by $7.9, $10.9 and $10.6 in 2007, 2006 and 2005,
respectively. Also, legislation enacted in Germany reduced the tax
rate applicable to the Company’s subsidiaries in Germany for fiscal
2008 and beyond. Thus an adjustment of $9.7 was made to reduce
deferred tax liabilities in fiscal 2007.
The American Jobs Creation Act of 2004 (AJCA) introduced a
special one-time dividends received deduction on the repatriation
of certain foreign earnings to a U.S. taxpayer. The repatriation of
foreign earnings following the criteria prescribed by the AJCA gen-
erated an additional tax provision in fiscal 2005 of $9.0.