ADS » Topics » 10. INCOME TAXES

This excerpt taken from the ADS 10-Q filed May 11, 2009.

9. INCOME TAXES

For the three months ended March 31, 2009 and 2008, the Company utilized an effective tax rate of 38.8% and 38.2%, respectively, to calculate its provision for income taxes. In accordance with APB Opinion No. 28, “Interim Financial Reporting,” this effective tax rate is the Company’s expected annual effective tax rate for calendar year 2009 based on all known variables.

This excerpt taken from the ADS 10-Q filed Nov 7, 2008.

10. INCOME TAXES

For the three months ended September 30, 2008 and September 30, 2007, the Company has utilized an effective tax rate of 38.7 % and 37.4%, respectively, and 38.4% and 37.9% for each of the nine month periods ended September 30, 2008 and 2007, respectively, to calculate its provision for income taxes. In accordance with Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” this effective tax rate is the Company’s expected annual effective tax rate for calendar year 2008 based on all known variables.

This excerpt taken from the ADS 10-Q filed Aug 8, 2008.

10. INCOME TAXES

For the three months ended June 30, 2008 and June 30, 2007, the Company has utilized an effective tax rate of 38.2 % and 38.1% respectively, and 38.2% for each of the six month periods ended June 30, 2008 and 2007, respectively, to calculate its provision for income taxes. In accordance with Accounting Principles Board (“APB”) Opinion No. 28, Interim Financial Reporting, this effective tax rate is the Company’s expected annual effective tax rate for calendar year 2008 based on all known variables.

This excerpt taken from the ADS 10-Q filed May 9, 2008.

8.  INCOME TAXES

For the three months ended March 31, 2008 and March 31, 2007, the Company has utilized an effective tax rate of 38.2% to calculate its provision for income taxes from continuing operations. In accordance with Accounting Principles Board Opinion No. 28, Interim Financial Reporting, this effective tax rate is the Company’s expected annual effective tax rate for calendar year 2008 based on all known variables.

This excerpt taken from the ADS 10-Q filed Nov 6, 2007.

10.  INCOME TAXES

For the three and nine months ended September 30, 2007, the Company has utilized an effective tax rate of 40.1% and 39.0%, respectively, to calculate its provision for income taxes. Legislation was enacted in various states during the three months ended September 30, 2007 that impacted the effective tax rate. In accordance with Accounting Principles Board (“APB”) Opinion No. 28, Interim Financial Reporting, the Company’s expected annual effective tax rate for calendar year 2007 based on all known variables is estimated to be approximately 38.9% excluding the effect of the change in tax laws.

On January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income Taxes, an interpretation of statement of Financial Accounting Standards No. 109. As a result of the implementation of FIN No. 48, the Company recognized approximately a $9 million increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to retained earnings.

As of September 30, 2007, the Company has unrecognized tax benefits of approximately $82 million, of which $28 million relate to taxes and $18 million relate to potential interest and penalties. These unrecognized tax benefits, if recognized at some point in the future, would favorably impact the effective tax rate by approximately $35 million. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits over the next twelve months.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the three and nine months ended September 30, 2007, the Company recognized approximately $0.5 million and $2.7 million, respectively, in potential interest and penalties with respect to unrecognized tax benefits.

The Company files income tax returns in the United States Federal jurisdiction and in many state and foreign jurisdictions. With few exceptions, the tax returns filed by the Company are no longer subject to United States Federal or state and local income tax examinations for years before 2004 and are no longer subject to foreign income tax examinations by tax authorities for years before 2003.

 

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Table of Contents

ALLIANCE DATA SYSTEMS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

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