Graco 2007 Annual Report Download - page 74

Newell Rubbermaid Inc. 2007 Annual Report
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A reconciliation of the U.S. statutory rate to the effective income tax rate is as follows for the years ended December 31:
2007 2006 2005
Statutory rate 35.0% 35.0% 35.0%
Add (deduct) effect of:
State income taxes, net of federal income tax effect 0.4 0.1 0.8
Foreign tax credit (1.5) (1.5) (0.3)
Foreign rate differential and other 1.1 (5.1) (9.0)
Resolution of tax contingencies (11.2) (4.8) (15.9)
Tax basis differential on goodwill impairment
— — 1.7
Impact of legal entity restructuring
— (15.1) —
Effective rate 23.8% 8.6% 12.3%
The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions.
The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2004, and the Internal Revenue Service (“IRS”)
has completed its examination of the Company’s 2004 federal income tax return. The Company’s Canadian income tax returns are subject to examination
for years after 2000. With few exceptions, the Company is no longer subject to other income tax examinations for years before 2004.
At December 31, 2007, the Company had foreign net operating loss (“NOL”) carryforwards of approximately $619.5 million, most of which carryforward
without expiration. The potential tax benefits associated with those foreign NOLs are approximately $201.8 million. The valuation allowance on NOLs decreased
$10.1 million during 2007 to $199.8 million at December 31, 2007. This decrease is primarily due to foreign NOLs utilized during the year.
The components of net deferred tax assets are as follows as of December 31, (in millions):
2007 2006
Deferred tax assets:
Accruals not currently deductible for tax purposes $ 132.1 $ 144.6
Postretirement liabilities 62.9 65.0
Inventory reserves 2.0 11.9
Pension liabilities 62.4 86.4
Self-insurance liability 7.9 8.7
Foreign net operating losses 201.8 214.4
Other 155.3 32.2
Total gross deferred tax assets 624.4 563.2
Less valuation allowance (272.6) (246.4)
Net deferred tax assets after valuation allowance $ 351.8 $ 316.8
Deferred tax liabilities:
Accelerated depreciation $ (68.9) $ (73.5)
Amortizable intangibles (146.1) (127.0)
Other (5.4) (4.9)
Total gross deferred tax liabilities (220.4) (205.4)
Net deferred tax assets $ 131.4 $ 111.4
Current deferred income tax assets $ 102.0 $ 110.1
Noncurrent deferred income tax assets 29.4 1.3
$ 131.4 $ 111.4
No U.S. deferred taxes have been provided on the undistributed non-U.S. subsidiary earnings that are considered to be indefinitely invested.
At December 31, 2007, the estimated amount of total unremitted non-U.S. subsidiary earnings is $544.6 million.