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These excerpts taken from the CPII 10-Q filed May 13, 2009. Income Tax (Benefit) Expense.
We recorded an income tax expense of $0.1 million for the three months ended
April 3, 2009 and an income tax expense of $2.1 million for the three months
ended March 28, 2008. Our effective tax rate was approximately 2% for the three
months ended April 3, 2009 as compared to approximately 26% for the three months
ended March 28, 2008.
Income
tax expense for the three months ended April 3, 2009 includes a discrete tax
benefit of approximately $0.7 million that is related to certain provisions of
the California Budget Act of 2008 signed on February 20, 2009, which will allow
a taxpayer to elect an alternative method to attribute taxable income to
California for tax years beginning on or after January 1, 2011, which resulted
in a reduction to our deferred tax liability accounts. We also recorded a
discrete tax benefit of $0.3 million relating to the correction of an immaterial
error in the computation of certain deferred tax accounts which should have been
recorded in several prior year’s financial results.
Income
tax expense for the three months ended March 28, 2008 includes a discrete tax
benefit of approximately $0.4 million that is attributable to the fourth quarter
of fiscal year 2007 relating to the correction of an immaterial error in the
computation of the warranty expense tax deduction.
Income Tax (Benefit) Expense.
We recorded an income tax benefit of $5.2 million for the six months ended April
3, 2009 and an income tax expense of $4.1 million for the six months ended March
28, 2008. The six months ended April 3, 2009 included several significant
discrete tax benefits: (1) $5.1 million related to an outstanding audit by the
Canada Revenue Agency (“CRA”), (2) $0.7 million related to certain provisions of
the California Budget Act of 2008 signed on February 20, 2009, which will allow
a taxpayer to elect an alternative method to attribute taxable income to
California for tax years beginning on or after January 1, 2011, which resulted
in a reduction to our deferred tax liability accounts, and (3) $0.9 million for
adjustments to Canadian deferred tax accounts.
In
December 2008, a new tax treaty protocol between Canada and the U.S. became
effective. The new treaty requires mandatory arbitration for the resolution of
double taxation disputes not settled through the competent authority process. As
a result of this new treaty, our tax position on an outstanding audit by the CRA
has become more favorable, and we reduced our tax contingency reserve in Canada
by $3.0 million, and established an income tax receivable and recognized an
income tax benefit in the U.S for $2.8 million; this tax benefit was partially
offset by a related increase in deferred tax liabilities of $0.7
million.
The $0.9
million adjustment to Canadian deferred tax accounts includes a $0.6 million tax
benefit to reflect the reduction to Canadian corporate income tax rates, and a
$0.3 million tax benefit to correct the computation of certain deferred tax
accounts. The $0.6 million adjustment should have been recorded in the first
quarter of fiscal year 2008 rather than in the first quarter of fiscal year 2009
and the $0.3 adjustment million should have been recorded in several prior
year’s financial results. These adjustments are deemed immaterial to our results
of operations and financial condition in current periods as well as prior
affected periods.
Income
tax expense for the six months ended March 28, 2008 includes a discrete tax
benefit of approximately $0.4 million that was attributable to the fourth
quarter of fiscal year 2007 relating to the correction of an immaterial error in
the computation of the warranty expense tax deduction.
Our
estimated effective income tax rate for the remainder of fiscal year 2009 is
expected to be approximately 36% to 37%.
This excerpt taken from the CPII 10-Q filed Feb 11, 2009. Income Tax (Benefit) Expense.
We recorded an income tax benefit of $5.3 million for the first quarter of
fiscal year 2009 and an income tax expense of $1.9 million for the first quarter
of fiscal year 2008. The first quarter of fiscal year 2009 included two
significant discrete tax benefits: (1) $5.1 million relating to an outstanding
audit by the Canada Revenue Agency (“CRA”), and (2) $0.6 million for an
adjustment to Canadian deferred tax accounts.
In
December 2008, a new tax treaty protocol between Canada and the U.S. became
effective. The new treaty requires mandatory arbitration for the resolution of
double taxation disputes not settled through the competent authority process. As
a result of this new treaty, our tax position on an outstanding audit by the CRA
has become more favorable, and we reduced our tax contingency reserve in Canada
by $3.0 million, and established an income tax receivable and recognized an
income tax benefit in the U.S for $2.8 million. The tax
benefit was partially offset by an increase in deferred tax liabilities of $0.7
million.
In
December 2007, the Canadian government enacted a tax reduction law which lowered
the general corporate income tax rates for calendar years 2008 and beyond. For
financial reporting purposes, a reduction in future income tax rates results in
a reduction of future tax benefits on deferred tax accounts and should be
reported in the same accounting period when the tax law was enacted. As a result
of the reduction in future Canadian corporate income tax rates, we reduced our
deferred tax accounts in first quarter of fiscal year 2009 and recorded a tax
benefit of $0.6 million. This adjustment should have been recorded in the first
quarter of fiscal year 2008 rather than in the first quarter of fiscal year
2009. Management has evaluated the impact of this adjustment on the financial
statements and has determined that it is an immaterial error.
Excluding these two
non-recurring tax benefits discussed above, income tax expense for the first
quarter of fiscal year 2009 was $0.4 million, which included a favorable impact
of $0.5 million from the translation of Canadian denominated tax liabilities.
Excluding both the two non-recurring tax benefits, and the favorable translation
impact, income tax expense was approximately $0.9 million, representing an
effective income tax rate of 37%.
Our
estimated effective income tax rate for the remainder of fiscal year 2009 is
expected to be approximately 36% to 37%.
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