Cardinal Health 2009 Annual Report Download - page 111

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The provision for income taxes from continuing operations consists of the following for the fiscal years
ended June 30, 2009, 2008 and 2007:
Fiscal Year Ended June 30,
(in millions) 2009 2008 2007
Current:
Federal ............................... $375.0 $455.5 $326.5
State and local ......................... 54.9 100.2 25.6
Non-U.S. .............................. 24.8 44.6 41.6
Total ............................. 454.7 600.3 393.7
Deferred:
Federal ............................... 55.6 (27.0) 17.4
State and local ......................... 13.9 56.8 1.5
Non-U.S. .............................. — (4.0) (7.1)
Total ............................. 69.5 25.8 11.8
Total provision ..................... $524.2 $626.1 $405.5
A reconciliation of the provision based on the federal statutory income tax rate to the Company’s effective
income tax rate from continuing operations is as follows for fiscal years ended June 30, 2009, 2008 and 2007:
Fiscal Year Ended June 30,
2009 2008 2007
Provision at Federal statutory rate ................... 35.0% 35.0% 35.0%
State and local income taxes, net of federal benefit (1) . . . 0.3 2.9 1.4
Foreign tax rate differential ........................ (5.7) (7.7) (11.1)
Nondeductible/nontaxable
Items ...................................... 1.5 1.8 1.3
In process R&D Costs ............................. — (0.5) 2.6
Deferred state tax rate adjustment (2) ................. 0.6 2.0 —
Capital gain from repatriation ....................... — 2.5 —
Capital loss carryforward valuation allowance release . . . (2.2) (2.5) —
Other (1) ....................................... 1.9 (0.9) 3.9
Effective income tax rate .......................... 31.4% 32.6% 33.1%
(1) During the fourth quarter of fiscal 2008, the Company recognized $30.4 million of previously unrecognized
tax benefits for items pertaining to fiscal 2002 and 2001 for which the statute of limitations had
lapsed. Approximately $1.8 million is included in “State and local income taxes, net of federal benefit” and
approximately $28.6 million is included in “Other.”
(2) During the fourth quarter of fiscal 2008, the Company recognized $37.3 million of additional tax expense
related to an increase in the estimated state income tax rate on deferred taxes.
As of June 30, 2009 the Company had $3.4 billion of undistributed earnings from non-U.S. subsidiaries that
are intended to be permanently reinvested in non-U.S. operations. Because these earnings are considered
permanently reinvested, no U.S. tax provision has been accrued related to the repatriation of these earnings. It is
not practicable to estimate the amount of U.S. tax that might be payable on the eventual remittance of such
earnings.
During fiscal 2008, the Company repatriated cash of $307.5 million from non-U.S. subsidiaries. As a result,
it incurred taxable dividends of $14.4 million, nontaxable return of capital / currency gain of $161.3 million and
taxable capital gain of $131.8 million. The taxable capital gain amount of $131.8 million was fully offset with a
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