3M 2007 Annual Report Download - page 65

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59
NOTE 8. Income Taxes
Income Before Income Taxes, Minority Interest and
Cumulative Effect of Accounting Change
(Millions) 2007 2006 2005
United States $2,820 $3,191 $2,604
International 3,295 2,434 2,224
Total $6,115 $5,625 $4,828
Provision for Income Taxes
(Millions) 2007 2006 2005
Currently payable
Federal $1,116 $1,087 $ 709
State 58 128 82
International 779 824 704
Deferred
Federal (105) (261) 127
State 1 (24) 11
International 115 (31) (6)
Total $1,964 $1,723 $1,627
Components of Deferred Tax Assets and Liabilities
(Millions) 2007 2006
Accruals not currently deductible
Employee benefit costs $ 240 $ 206
Product and other claims 258 190
Pension costs (99)
478
Restructuring costs 2 66
Stock-based compensation 377 335
Product and other insurance receivables (154) (156)
Accelerated depreciation (403) (541)
Other 6 (4)
Net deferred tax asset (liability) $ 227 $ 574
Reconciliation of Effective Income Tax Rate 2007 2006 2005
Statutory U.S. tax rate 35.0% 35.0% 35.0%
State income taxes – net of federal benefit 0.9 1.0 1.3
International income taxes – net (2.8) (1.5) (2.2)
Jobs Act repatriation – –1.6
Foreign export sales benefit – (0.9) (1.0)
U.S. business credits (0.3) (0.3) (0.4)
Reserves for tax contingencies/return to provision 0.4 (2.7) –
Gain on sale of pharmaceuticals business – 0.4 –
Restructuring actions 0.1 (0.3) –
In-process research and development write-off – 0.6 –
Medicare Modernization Act (0.4) (0.4) (0.3)
Domestic Manufacturer’s deduction (0.8) (0.3) (0.2)
All other – net – – (0.1)
Effective worldwide tax rate 32.1% 30.6% 33.7%