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These excerpts taken from the LXK 10-K filed Feb 27, 2009. Income
Taxes
The Company estimates its tax liability based on current tax
laws in the statutory jurisdictions in which it operates. These
estimates include judgments about deferred tax assets and
liabilities resulting from temporary differences between assets
and liabilities recognized for financial reporting purposes and
such amounts recognized for tax purposes, as well as about the
realization of deferred tax assets. If the provisions for
current or deferred taxes are not adequate, if the Company is
unable to realize certain deferred tax assets or if the tax laws
change unfavorably, the Company could potentially experience
significant losses in excess of the reserves established.
Likewise, if the provisions for current and deferred taxes are
in excess of those eventually needed, if the Company is able to
realize additional deferred tax assets or if tax laws change
favorably, the Company could potentially experience significant
gains.
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — an
interpretation of FASB Statement No. 109
(“FIN 48”). FIN 48 clarifies the
accounting for income taxes by prescribing the minimum
recognition threshold as “more-likely-than-not” that a
tax position must meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting for income
taxes in interim periods, financial statement disclosure and
transition rules.
The evaluation of a tax position in accordance with FIN 48
is a two-step process. The first step is recognition: The
enterprise determines whether it is more likely than not that a
tax position will be sustained upon examination, including
resolution of any litigation. The second step is measurement: A
tax position that meets the more-likely-than-not recognition
threshold is measured to determine the amount of benefit to
recognize in the financial statements. The tax position is
measured at the largest amount of benefit that is greater than
50 percent likely of being realized upon ultimate
resolution.
The Company adopted the provisions of FIN 48 and related
guidance on January 1, 2007. As a result of the
implementation of FIN 48, the Company reduced its liability
for unrecognized tax benefits and related interest and penalties
by $7.3 million, which resulted in a corresponding increase
in the Company’s January 1, 2007, retained earnings
balance. The Company also recorded an increase in its deferred
tax assets of $8.5 million and a corresponding increase in
its liability for unrecognized tax benefits as a result of
adopting FIN 48.
Uncertain tax positions at year-end 2008 were evaluated using
the two-step process described in the paragraphs above.
Income
Taxes:
The provision for income taxes is computed based on pre-tax
income included in the Consolidated Statements of Earnings. The
Company estimates its tax liability based on current tax laws in
the statutory jurisdictions in which it operates. These
estimates include judgments about the recognition and
realization of deferred tax assets and liabilities resulting
from the expected future tax consequences of events that have
been included in the financial statements. Under this method,
deferred tax assets and liabilities are determined based on the
difference between the financial statement carrying amounts and
tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
The Company determines its effective tax rate by dividing its
income tax expense by its income before taxes as reported in its
Consolidated Statements of Earnings. For reporting periods prior
to the end of the Company’s fiscal year, the Company
records income tax expense based upon an estimated annual
effective tax rate. This rate is computed using the statutory
tax rate and an estimate of annual net income by geographic
region adjusted for an estimate of non-deductible expenses and
available tax credits.
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — an
interpretation of FASB Statement No. 109
(“FIN 48”). FIN 48 clarifies the
accounting for income taxes by prescribing the minimum
recognition threshold as “more-likely-than-not” that a
tax position must meet before being recognized in the financial
statements. FIN 48 also provides
guidance on derecognition, classification, interest and
penalties, accounting for income taxes in interim periods,
financial statement disclosure and transition rules.
The evaluation of a tax position in accordance with FIN 48
is a two-step process. The first step is recognition: The
enterprise determines whether it is more likely than not that a
tax position will be sustained upon examination, including
resolution of any litigation. The second step is measurement: A
tax position that meets the more-likely-than-not recognition
threshold is measured to determine the amount of benefit to
recognize in the financial statements. The tax position is
measured at the largest amount of benefit that is greater than
50 percent likely of being realized upon ultimate
resolution.
This excerpt taken from the LXK 10-K filed Feb 27, 2008. Income
Taxes:
The provision for income taxes is computed based on pre-tax
income included in the Consolidated Statements of Earnings. The
Company estimates its tax liability based on current tax laws in
the statutory jurisdictions in which it operates. These
estimates include judgments about the recognition and
realization of deferred tax assets and liabilities resulting
from the expected future tax consequences of events that have
been included in the financial statements. Under this method,
deferred tax assets and liabilities are determined based on the
difference between the financial statement carrying amounts and
tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
The Company determines its effective tax rate by dividing its
income tax expense by its income before taxes as reported in its
Consolidated Statement of Operations. For reporting periods
prior to the end of the Company’s fiscal year, the Company
records income tax expense based upon an estimated annual
effective tax rate. This rate is computed using the statutory
tax rate and an estimate of annual net income by geographic
region adjusted for an estimate of non-deductible expenses.
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — an
interpretation of FASB Statement No. 109
(“FIN 48”). FIN 48 clarifies the
accounting for income taxes by prescribing the minimum
recognition threshold as “more-likely-than-not” that a
tax position must meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting for income
taxes in interim periods, financial statement disclosure and
transition rules.
The evaluation of a tax position in accordance with FIN 48
is a two-step process. The first step is recognition: The
enterprise determines whether it is more likely than not that a
tax position will be sustained upon examination, including
resolution of any litigation. The second step is measurement: A
tax position
that meets the more-likely-than-not recognition threshold is
measured to determine the amount of benefit to recognize in the
financial statements. The tax position is measured at the
largest amount of benefit that is greater than 50 percent
likely of being realized upon ultimate resolution.
This excerpt taken from the LXK 10-K filed Feb 28, 2007. Income
Taxes:
The provision for income taxes is computed based on pre-tax
income included in the Consolidated Statements of Earnings. The
Company recognizes deferred tax assets and liabilities for the
expected future tax consequences of events that have been
included in the financial statements. Under this method,
deferred tax assets and liabilities are determined based on the
difference between the financial statement carrying amounts and
tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
The Company determines its effective tax rate by dividing its
income tax expense by its income before taxes as reported in its
Consolidated Statement of Operations. For reporting periods
prior to the end of the Company’s fiscal year, the Company
records income tax expense based upon an estimated annual
effective tax rate. This rate is computed using the statutory
tax rate and an estimate of annual net income adjusted for an
estimate of non-deductible expenses.
In July 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — an
interpretation of FASB Statement No. 109
(“FIN 48”). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition
threshold as “more-likely-than-not” that a tax
position must meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting for income
taxes in interim periods, financial statement disclosure and
transition rules.
The evaluation of a tax position in accordance with FIN 48
is a two-step process. The first step is recognition: The
enterprise determines whether it is more likely than not that a
tax position will be sustained
Table of Contents
upon examination, including resolution of any litigation. The
second step is measurement: A tax position that meets the
more-likely-than-not recognition threshold is measured to
determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount
of benefit that is greater than 50 percent likely of being
realized upon ultimate resolution.
The Company is required to adopt the provisions of FIN 48
related to all of the Company’s tax positions for the
fiscal year beginning January 1, 2007. The cumulative
effect of applying the provisions of FIN 48 will be
reported as an adjustment to the opening balance of retained
earnings. The Company has not completed its evaluation of
FIN 48 but estimates the cumulative effect to be an
increase to retained earnings in the range of $0 to
$20 million.
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