This excerpt taken from the CVS 10-K filed Feb 27, 2007.
Income tax provision ~ Our effective income tax rate was 38.5% in 2006, 35.8% in 2005 and 34.2% in 2004.
As you review our results in this area, we believe you should consider the following important information:
· The effective income tax rate was negatively impacted during 2006 due to the implementation of SFAS No. 123(R), as the compensation expense associated with our employee stock purchase plan is not deductible for income tax purposes unless, and until, any disqualifying dispositions occur.
· During the fourth quarters of 2006, 2005 and 2004, various events resulted in the Company recording reductions of previously recorded tax reserves through the income tax provision of $11.0 million, $52.6 million and $60.0 million, respectively.
· For internal comparisons, management finds it useful to assess year-to-year performance excluding the impact of the tax benefit in 2006, 2005 and 2004 discussed above, and uses 39.0%, 38.6% and 38.5% as comparable effective tax rates for 2006, 2005 and 2004, respectively.
This excerpt taken from the CVS 10-Q filed May 9, 2005.
Income tax provision ~ Our effective income tax rate was 38.6% for the first quarter of 2005, compared to 38.5% for the first quarter of 2004. The increase in our effective income tax rate was primarily due to higher state income taxes.