First Data 2008 Annual Report Download - page 147

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9: Income Taxes
Successor Predecessor
(in millions)
Year ended
December 31,
2008
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year ended
December 31,
2006
Components of pretax (loss) income before discontinued operations and certain minority interest
adjustments:
Domestic $ (4,137.6) $ (511.9) $ 454.1 $ 951.2
Foreign (324.1) 34.0 137.4 102.9
$ (4,461.7) $ (477.9) $ 591.5 $ 1,054.1
(Benefit) provision for income taxes before discontinued operations and certain minority interest
adjustments:
Federal $ (667.8) $ (182.9) $ 55.0 $ 148.2
State and local (46.6) (5.8) 36.3 34.2
Foreign 15.2 12.6 34.5 21.3
$ (699.2) $ (176.1) $ 125.8 $ 203.7
The Company's effective tax rates from continuing operations differ from statutory rates as follows:
Successor (1) Predecessor
Year ended
December 31,
2008
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year ended
December 31,
2006
Federal statutory rate 35.0% 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit 1.1 0.8 2.2 2.2
Foreign rate differential 1.1 (1.8) (2.6) (4.3)
Interest earned on municipal investments 0.0 7.6 (18.6) (14.6)
Dividend exclusion 0.0 0.9 (1.9) (1.2)
Valuation allowances (0.1) (5.6) (0.3) 2.3
Prior year income tax return true-ups 0.2 0.0 2.3 0.0
Non-deductible merger related expenses 0.0 (0.1) 3.2 0.0
Goodwill impairment (23.6) 0.0 0.0 0.0
Other 2.0 0.0 2.0 0.0
Effective tax rate 15.7% 36.8% 21.3% 19.4%
(1) The change from pretax income in predecessor periods to a pretax loss in the successor periods caused a general shift in several components of the tax
rate reconciliation.
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