Chairman's - FMC Corporation

FMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
carryforwards of $145.1 million expiring in various years, U.S. foreign tax credit carryforwards of $50.8 million
expiring in various amounts and years through 2018, and alternative minimum tax credit carryforwards of $40.8
million with no expiration date.
The effective income tax rate applicable to income from continuing operations before income taxes was
different from the statutory U.S. federal income tax rate due to the factors listed in the following table:
Year Ended December 31,
2009 2008 2007
Statutory U.S. tax rate ..................................................... 35% 35% 35%
Net difference:
Percentage depletion ...................................................... (6) (4) (8)
State and local income taxes, less federal income tax benefit ...................... 2 1 —
Foreign earnings subject to different tax rates .................................. (3) (5) (10)
Tax on intercompany dividends and deemed dividend for tax purposes .............. (2) 1 1
Nondeductible expenses ................................................... 1 — 2
Changes to unrecognized tax benefits ......................................... (4) (1) 5
Change in valuation allowance .............................................. (6) — (10)
Total difference .......................................................... (18) (8) (20)
Effective tax rate ......................................................... 17% 27% 15%
As of December 31, 2009, our federal income tax returns for years through 2006 have been examined by the
Internal Revenue Service (“IRS”) and all issues have been settled. We believe that adequate provision for both
federal and foreign income taxes has been made for the open years 2001 and after. Income taxes have not been
provided for the equity in undistributed earnings of foreign consolidated subsidiaries of $657.4 million or for
foreign unconsolidated subsidiaries and affiliates of $18.2 million at December 31, 2009. Restrictions on the
distribution of these earnings are not significant. It is not practical to estimate the amount of taxes that might be
payable upon the remittance of such earnings. Foreign earnings taxable as dividends were $6.2million, $5.1
million and $4.4 million in 2009, 2008 and 2007, respectively.
Uncertain Income Tax Positions
U.S. GAAP accounting guidance for uncertainty in income taxes prescribes a model for the recognition and
measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on
derecognition, classification, interest and penalties, disclosure and transition. We adopted this guidance on
January 1, 2007. As a result of the implementation, we recognized a net increase in our liability for unrecognized
tax benefits which was accounted for as a $2.8 million decrease to the January 1, 2007 balance of retained
earnings.
We file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The
income tax returns for FMC entities taxable in the U.S and significant foreign jurisdictions are open for
examination and adjustment. As of December 31, 2009, the United States Federal and State income tax returns
are open for examination and adjustment for years 2004-2009. Our significant foreign jurisdictions, which total
13, are open for examination and adjustment during varying periods from 2001-2009.
The total amount of unrecognized tax benefits as of December 31, 2009 that, if recognized, would affect the
effective tax rate is $14.4 million. We recognize accrued interest and penalties related to unrecognized tax
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