Freddie Mac 2010 Annual Report Download - page 242

compensation granted prior to conservatorship. Common stock delivered under these stock-based compensation plans consist
of treasury stock or shares acquired in market transactions on behalf of the participants. During 2010, restrictions lapsed on
1,293,937 restricted stock units and 209,435 restricted stock units were forfeited. At December 31, 2010, 1,380,124 restricted
stock units remained outstanding. In addition, there were 41,160 shares of restricted stock outstanding at both December 31,
2010 and 2009. During 2010, no stock options were exercised and 591,390 stock options were forfeited or expired. At
December 31, 2010, 3,182,452 stock options were outstanding.
During the years ended December 31, 2010 and 2009, we recognized $24 million and $57 million, respectively, of
compensation expense related to stock-based compensation on our consolidated statements of operations.
Dividends Declared During 2010
No common dividends were declared in 2010. During 2010, we paid dividends of $5.7 billion in cash on the senior
preferred stock at the direction of our Conservator. We did not declare or pay dividends on any other series of Freddie Mac
preferred stock outstanding during 2010.
On March 30, 2010, our REIT subsidiaries paid preferred stock dividends for one quarter, consistent with approval from
Treasury and direction from FHFA. No other preferred or common stock dividends were paid by the REITs during the year
ended December 31, 2010. See “NOTE 16: NONCONTROLLING INTERESTS” for more information.
Delisting of Common Stock and Preferred Stock from NYSE
On July 8, 2010, we delisted our common and 20 previously-listed classes of preferred securities from the NYSE
pursuant to a directive by FHFA, our Conservator.
Our common stock and the classes of preferred stock that were previously listed on the NYSE are traded exclusively in
the OTC market. Shares of our common stock now trade under the ticker symbol FMCC. We expect that our common stock
and the previously listed classes of preferred stock will continue to trade in the OTC market so long as market makers
demonstrate an interest in trading the common and preferred stock.
NOTE 14: INCOME TAXES
Income Tax Benefit (Expense)
We are exempt from state and local income taxes. Table 14.1 presents the components of our income tax benefit
(expense) for 2010, 2009, and 2008.
Table 14.1 — Federal Income Tax Benefit (Expense)
2010 2009 2008
Year Ended December 31,
(in millions)
Current income tax benefit (expense) ........................................................ $186 $160 $ (45)
Deferred income tax benefit (expense) . . . .................................................... 670 670 (5,507)
Total income tax benefit (expense)
(1)
....................................................... $856 $830 $(5,552)
(1) Does not reflect: (a) the deferred tax effects of unrealized (gains) losses on available-for-sale securities, the tax effects of net (gains) losses related to the
effective portion of derivatives designated in cash flow hedge relationships, and the tax effects of certain changes in our defined benefit plans which are
reported as part of AOCI; (b) certain stock-based compensation tax effects reported as part of additional paid-in capital; and (c) the tax effect of the
cumulative effect of change in accounting principles.
A reconciliation between our federal statutory income tax rate and our effective tax rate for 2010, 2009, and 2008 is
presented in Table 14.2.
Table 14.2 — Reconciliation of Statutory to Effective Tax Rate
Amount Percent Amount Percent Amount Percent
2010 2009 2008
Year Ended December 31,
(dollars in millions)
Statutory corporate tax rate ...................................... $5,209 35.0% $ 7,834 35.0% $ 15,597 35.0%
Tax-exempt interest . . . . ....................................... 213 1.4 252 1.1 266 0.6
Tax credits ................................................. 585 3.9 594 2.7 589 1.3
Unrecognized tax benefits and related interest/contingency reserves .......... (12) (0.1) (12) (0.1) 167 0.4
Valuation allowance . . . . ....................................... (5,155) (34.6) (7,860) (35.1) (22,172) (49.8)
Other. .................................................... 16 0.1 22 0.1 1 —
Effective tax rate . . . . . . ....................................... $ 856 5.7% $ 830 3.7% $ (5,552) (12.5)%
In 2010, 2009, and 2008, our effective tax rate differs from the statutory tax rate of 35% primarily due to the
establishment of a valuation allowance against a portion of our net deferred tax assets. Those income tax benefits recognized
in 2010 and 2009 represent the current tax benefits associated with our ability to carry back net operating tax losses
239 Freddie Mac