EMC 2009 Annual Report Download - page 70

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems
shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts
applicable to each of the components. Additionally, the provision for the year ended December 31, 2008 includes $6.9 million assumed in the acquisition of
Iomega Corporation.
L. Income Taxes
Our provision (benefit) for income taxes consists of (table in thousands):
2009 2008 2007
Federal:
Current $ 181,578 $ 156,501 $ 324,812
Deferred 7,977 9,681 (81,531)
189,555 166,182 243,281
State:
Current 13,114 18,387 21,475
Deferred 13,419 1,128 (3,572)
26,533 19,515 17,903
Foreign:
Current 30,885 100,879 100,556
Deferred 5,802 (6,180) (13,529)
36,687 94,699 87,027
Total provision for income taxes $ 252,775 $ 280,396 $ 348,211
In 2009, 2008 and 2007, we were able to utilize $68.9 million, $52.6 million and $62.3 million, respectively, of net operating loss carryforwards and tax
credits to reduce the current portion of our tax provision.
The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for
the potential tax consequences, benefits or resolutions of tax audits. A reconciliation of our income tax provision to the statutory federal tax rate is as follows:
2009 2008 2007
Statutory federal tax rate 35.0% 35.0% 35.0%
State taxes, net of federal taxes 1.0 1.2 1.2
Resolution of uncertain tax positions (4.5) (2.9) (1.3)
Tax rate differential for international jurisdictions and other international related tax items (17.5) (15.9) (15.2)
U.S. tax credits (3.1) (5.2) (2.1)
Changes in valuation allowance — — (1.5)
Reorganization of RSA and Data Domain 4.4 — —
Permanent items 4.2 5.3 2.1
Other (1.1) — (0.5)
18.4% 17.5% 17.7%
In 2009, we effected a plan to reorganize our international operations by transferring certain assets of our RSA and Data Domain entities and legacy
foreign corporations owned directly by EMC into a single EMC international holding company. As a result of this reorganization, we incurred income taxes
which negatively impacted the rate by 4.4 percentage points.
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