Sunbeam 2008 Annual Report Download - page 55

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The difference between the federal statutory income tax rate and the Company’s reported income tax rate as a percentage of income (loss)
from operations is reconciled as follows:
Years Ended December 31,
2008 2007 2006
Federal statutory tax rate (35.0)% 35.0% 35.0%
Increase (decrease) in rates resulting from:
State and local taxes, net (24.3) (4.6) 1.7
Foreign rate differences (30.1) (6.8) (1.4)
Internal restructuring of domestic legal entities — — 7.2
Non-deductible compensation 12.3 6.6 1.0
Foreign earnings not permanently reinvested 43.2 18.0 —
IRS audit settlements — 7.0 —
Goodwill impairment 102.7 — —
Valuation allowance 7.7 — —
Other 4.2 2.5 0.1
Reported income tax rate 80.7% 57.7% 43.6%
Foreign pre-tax income was approximately $165, $144, and $109 for 2008, 2007, and 2006, respectively.
Deferred tax (liabilities) assets arecomprised of the following:
Asof December 31,
(In millions) 2008 2007
Intangibles $(296.8) $ (374.6)
Goodwill (68.5) (78.2)
Financial reporting amount of a subsidiaryin excess of tax basis (72.5) (72.5)
Foreign earnings not permanently reinvested (16.8) (9.6)
Other (29.8) (18.0)
Gross deferred tax liabilities (484.4) (552.9)
Net operating loss 150.0 138.9
Accounts receivable allowances 14.4 16.7
Inventory valuation 44.2 36.0
Pension and postretirement 51.4 24.3
Stock-based compensation 14.7 14.5
Other compensation and benefits 14.8 13.2
Operating reserves 75.9 95.1
Property and equipment — 11.1
Other 61.5 44.1
Gross deferred tax assets 426.9 393.9
Valuation allowance (28.0) (35.7)
Net deferred tax liability $(85.5) $ (194.7)
The Company continually reviews the adequacy of the valuation allowance. A valuation allowance is recorded if, based on the weight
of available evidence, it is more likely than not that a deferred tax asset will not be realized. This assessment is based on an evaluation of the
level of historical taxable income and projections for future taxable income. During 2008, the Company’s valuation allowance was increased
by $2.5 due to the inability to benefit from certain foreign losses which were booked as additional tax expense. In addition, certain valuation
allowances decreased by $10.2, principally from certain foreign losses and other deferred tax assets that were considered no longer
available.
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2008 (Dollars in millions, except per share data and unless otherwise indicated)
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