INCOME TAXES. The components of income before income taxes are as follows: Year Ended June 30, 2007 2006 2005 (in thousands) Domestic income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $538,257 $329,066 $510,328 Foreign income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,978 48,792 72,748 Total net income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $677,235 $377,858 $583,076 The provision for income taxes is comprised of the following: Year Ended June 30, 2007 2006 2005 (in thousands) Current: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,287 $106,676 $170,507 State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204 8,998 8,017 Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,189 20,217 16,378 Deferred: $163,680 $135,891 $194,902 Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,741) (125,632) (51,526) State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,534 (3,535) (3,029) Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,036 (5,217) 1,058 (13,171) (134,384) (53,497) Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,509 $1,507 $141,405 Actual current tax liabilities are lower than reflected above for the fiscal years ended June 30, 2007, 2006 and 2005 by $1.3 million, $31.9 million and $12.6 million, respectively, due primarily to the stock option deduction benefits recorded as credits to capital in excess of par value. The significant components of deferred income tax assets (liabilities) are as follows: Deferred tax assets: (in thousands) Tax credits and net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,493 $27,037 Employee benefits accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,3...
INCOME TAXES. The Company recorded a provision of $22.8 million and $129.4 million for the three months and six months ended December 31, 2007, which represent effective tax rates of 21.4% and 42.9%, respectively. The increase in the effective tax rate for the six months ended December 31, 2007 over prior periods was primarily due to the immediate impact of $46.6 million of incremental U.S. tax expense associated with the implementation of the Company’s global manufacturing strategy during the three months ended September 30, 2007. This increase was offset by a reduction of tax expense of $23.6 million in connection with the expense recorded during the three months ended December 31, 2007 related to the proposed settlement of the shareholder class action lawsuit (see Note 10, “Litigation and Other Legal Matters”). In addition, there was an increase to the effective tax rate for the six months ended December 31, 2007 compared to the year ended June 30, 2007, due to decreases in the tax benefits related to tax exempt interest, research and development credit and extraterritorial income exclusion. We expect the tax rate in future periods of the year ending June 30, 2008 to result in an annual rate of approximately 37% which includes the effect of the higher tax expense associated with the implementation of our global manufacturing strategy offset by the tax benefit related to the expense to settle the shareholder class action lawsuit. The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”), on July 1, 2007. FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109, Accounting for Income Taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. As a result of the adoption of FIN 48, the Company increased the liability for net unrecognized tax benefits by $8.4 million, and accounted for the increase as a cumulative effect of change in accounting principle that resulted in a reduction of retained earnings of $8.4 million at July 1, 20...
INCOME TAXES. The provision for income taxes for the years ended December 31, 2003 and 2002 consisted of the following: 2003 2002 Current: Federal—including alternative minimum tax ; ; ; ; $ (2,134) $ (3,051) State and local ; ; ; ; ; ; ; ; 338 455 (1,796) (2,596)