FDC 2017 Annual Report

FI R S T D A T A C O R P O R A TI O N N O T E S T O T H E C O N S O LI D A T E D FI N A N CI A L S T A T E M E N T S ( C o nti n u e d) 9 4 t h e t a x e x p e ns e r el at e d t o GI L TI i n t h e y e ar t h e t a x is i n c urr e d. T h e C o m p a n y h as el e ct e d t o r e c o g ni z e t h e t a x o n GI L TI as a peri o d e x p e ns e i n t h e p eri o d t h e t a x is i n c urr e d. A r e c o n cili ati o n of t h e u nr e c o g ni z e d t a x b e n efits w as as f oll o ws: (i n milli o ns) U n re c o g ni z e d Ta x B e n efits B al a n c e as of J a n u ar y 1, 2 0 1 5 $ 2 3 6 I n cr e as es f or t a x p ositi o ns of pri or y e ars 2 5 D e cr e as es f or t a x p ositi o ns of pri or y e ars ( 4) I n cr e as es f or t a x p ositi o ns r el at e d t o t h e c urr e nt p eri o d 1 D e cr e as es f or c as h s ettl e m e nts wit h t a xi n g a ut h oriti es ( 3) D e cr e as es d u e t o t h e l a ps e of t h e a p pli c a bl e st at ut e of li mit ati o ns ( 6) B al a n c e as of D e c e m b er 3 1, 2 0 1 5 2 4 9 I n cr e as es f or t a x p ositi o ns of pri or y e ars 2 D e cr e as es f or t a x p ositi o ns of pri or y e ars ( 1) I n cr e as es f or t a x p ositi o ns r el at e d t o t h e c urr e nt p eri o d — D e cr e as es f or c as h s ettl e m e nts wit h t a xi n g a ut h oriti es ( 1) D e cr e as es d u e t o t h e l a ps e of t h e a p pli c a bl e st at ut e of li mit ati o ns ( 9) B al a n c e as of D e c e m b er 3 1, 2 0 1 6 2 4 0 I n cr e as es f or t a x p ositi o ns of pri or y e ars 1 4 D e cr e as es f or t a x p ositi o ns of pri or y e ars ( 1 0) D e cr e as es f or t a x p ositi o ns r el at e d t o t h e c urr e nt p eri o d ( 3) D e cr e as es f or c as h s ettl e m e nts wit h t a xi n g a ut h oriti es ( 1) D e cr e as es d u e t o t h e l a ps e of t h e a p pli c a bl e st at ut e of li mit ati o ns ( 7) D e cr e as es d u e t o c h a n g e i n t a x r at es ( 1 3) B al a n c e as of D e c e m b er 3 1, 2 0 1 7 $ 2 2 0 M ost of t h e u nr e c o g ni z e d t a x b e n efits ar e i n cl u d e d i n “ Ot h er l o n g-t er m li a biliti es ” o n t h e c o ns oli d at e d b al a n c e s h e ets, n et of t h e f e d er al b e n efit o n st at e i n c o m e t a x es ( a p pr o xi m at el y $ 1 2 milli o n as of D e c e m b er 3 1, 2 0 1 7). H o w e v er, t h os e u nr e c o g ni z e d t a x b e n efits t h at aff e ct t h e f e d er al c o ns oli d at e d t a x y e ars e n di n g D e c e m b er 3 1, 2 0 0 8 t hr o u g h D e c e m b er 3 1, 2 0 1 7 ar e i n cl u d e d i n “ D ef err e d t a x li a biliti es ” o n t h e c o ns oli d at e d b al a n c e s h e ets, as t h es e it e ms r e d u c e t h e C o m p a n y’s n et o p er ati n g l oss a n d cr e di t c arr yf or w ar ds fr o m t h os e p eri o ds. T h e u nr e c o g ni z e d t a x b e n efits as of D e c e m b er 3 1, 2 0 1 7, 2 0 1 6, a n d 2 0 1 5 i n cl u d e d a p pr o xi m at el y $ 1 3 0 milli o n, $ 1 3 3 milli o n, a n d $ 1 3 6 milli o n, r es p e cti v el y, of t a x p ositi o ns t h at, if r e c o g ni z e d, w o ul d aff e ct t h e eff e cti v e t a x r at e. T h e C o m p a n y r e c o g ni z es i nt er est a n d p e n alti es r el at e d t o u nr e c o g ni z e d t a x b e n efits i n “I n c o m e t a x ( b e n efit) e x p e ns e ” i n t h e c o ns oli d at e d st at e m e nts of o p er ati o ns. C u m ul ati v e a c cr u e d i nt er est a n d p e n alti es ( n et of r el at e d t a x b e n efits) ar e n ot i n cl u d e d i n t h e e n di n g b al a n c es of u nr e c o g ni z e d t a x b e n efits. C u m ul ati v e a c cr u e d i nt er est a n d p e n alti es ar e i n cl u d e d i n “ Ot h er l o n g-t er m li a biliti es ” o n t h e c o ns oli d at e d b al a n c e s h e ets w hil e t h e r el at e d t a x b e n efits ar e i n cl u d e d i n “ D ef err e d t a x li a biliti es ” o n t he c o ns oli d at e d b al a n c e s h e ets. T h e f oll o wi n g t a bl e pr es e nts t h e a p pr o xi m at e a m o u nts ass o ci at e d wit h a c cr u e d i nt er est e x p e ns e a n d t h e c u m ul ati v e a c cr u e d i nt er est a n d p e n alti es: Ye a r e n d e d D e c e m b e r 3 1, (i n milli o ns) 2 0 1 7 2 0 1 6 2 0 1 5 C urr e nt y e ar a c cr u e d i nt er est e x p e ns e ( n et of r el at e d t a x b e n efits) $ 6 $ 5 $ 7 C u m ul ati v e a c cr u e d i nt er est a n d p e n alti es ( n et of r el at e d t a x b e n efits) 6 0 4 8 4 5 As of D e c e m b er 3 1, 2 0 1 7, t h e C o m p a n y a nti ci p at es it is r e as o n a bl y p ossi bl e t h at its li a bilit y f or u nr e c o g ni z e d t a x b e n efits m a y d e cr e as e b y a p pr o xi m at el y $ 1 3 4 milli o n wit hi n t h e n e xt 1 2 m o nt hs as a r es ult of t h e p ossi bl e cl os ur e of f e d er al t a x a u dits, p ot e nti al s ettl e m e nts wit h c ert ai n st at es a n d f or ei g n c o u ntri es, a n d t h e l a ps e of t h e st at ut e of li mit ati o ns i n v ari o us st at e a n d f or ei g n j uris di cti o ns.