Black & Decker 2010 Annual Report Download - page 124

Income tax expense (benefit) attributable to continuing operations consisted of the following:
(Millions of Dollars) 2010 2009 2008
Current:
Federal .......................................... $(74.7) $(1.0) $27.0
Foreign .......................................... 107.0 21.1 38.0
State ............................................ 4.7 7.1 8.7
Total current ...................................... $37.0 $27.2 $73.7
Deferred:
Federal .......................................... $37.5 $34.4 $(0.9)
Foreign .......................................... (31.8) (5.0) 2.8
State ............................................ (3.8) (2.1) (3.1)
Total deferred ..................................... 1.9 27.3 (1.2)
Income taxes on continuing operations ..................... $38.9 $54.5 $72.5
Net income taxes paid during 2010, 2009 and 2008 were $97.7 million, $58.6 million and $134.4 million,
respectively. The 2010 amount includes U.S. Federal refunds of $77.4 million relating to an NOL carry back,
an audit settlement and a prior year overpayment. During 2010, the Company had tax holidays in Thailand and
China. Tax holidays resulted in a reduction of tax expense amounting to $2.9 million in 2010, $2.0 million in
2009 and $2.7 million in 2008. The tax holiday in Thailand expired during 2010 while the tax holiday in
China expires between 2011 and 2015.
The reconciliation of the U.S. federal statutory income tax to the income taxes on continuing operations is as
follows:
(Millions of Dollars) 2010 2009 2008
Tax at statutory rate .................................. $83.0 $99.2 $102.6
State income taxes, net of federal benefits .................. 1.4 4.7 5.2
Difference between foreign and federal income tax............ (81.7) (27.5) (32.4)
Tax accrual reserve ................................... 7.3 (8.3) 2.5
Audit settlements .................................... (36.0) (8.8) (3.0)
Unbenefited tax losses................................. 12.4 — 1.2
Foreign dividends and related items ....................... 7.8 —.5
Merger related amortization tax rate differential .............. 8.7 ——
Non-deductible merger related costs....................... 50.1 4.9 —
Change in deferred tax liabilities on undistributed foreign
earnings ......................................... (10.6) ——
Statutory income tax rate change ......................... 1.5 (0.1) (0.4)
Other-net .......................................... (5.0) (9.6) (3.7)
Income taxes on continuing operations ..................... $38.9 $54.5 $72.5
The components of earnings from continuing operations before income taxes consisted of the following:
(Millions of Dollars) 2010 2009 2008
United States........................................ $(182.7) $115.1 $94.8
Foreign ............................................ 419.8 168.2 198.4
Earnings from continuing operations before income taxes ....... $237.1 $283.3 $293.2
Concurrent with the Merger, the Company has made a determination to repatriate $1,636.1 million of legacy
Black & Decker foreign earnings, on which U.S. income taxes had not previously been provided. As a result
of this repatriation decision, in conjunction with the purchase accounting under ASC 805, the Company has
recorded deferred tax liabilities of approximately $442.9 million. All other undistributed foreign earnings of
the Company at January 1, 2011, in the amount of $1,916.3 million, are considered to be permanently
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