Seigel & Associates Introduces
The Seigel Tax Reserve Report

  (Click the image above
      to get the Report
        pdf - 1.0 MB)

The Report, which will be issued quarterly, provides comprehensive analysis and review of tax reserve disclosures and financial data contained in the financial statements of major corporations filed with their SEC annual reports.

This first edition of the Report covers 601 corporations that have annual revenues of $2 billion or more that filed their SEC reports during the first quarter of 2008. Subsequent Reports will cover annual SEC reports filed by the same revenue sized corporations during the applicable quarter.

In the Report, we have evaluated the extent and quality of FIN 48 disclosures made by these corporations on a company-by-company basis and assign each a Seigel Index score reflecting the degree of satisfactory compliance with FIN 48’s disclosure mandates. The Report also contains significant quantitative data dealing with tax reserves and related financial information.

The Executive Summary appears below:

I. Overall Data

This report reviews the financial statements of the 601 public companies with revenues of at least $2 billion that filed annual reports with the SEC in the first quarter of 2008.

These companies, in the aggregate, had annual revenues of $7.8 trillion and assets of
    $25 trillion.

They had total tax reserves of $155 billion and median tax reserves of $56 million.

Their total tax reserves represented 2.0% of their revenues and 0.6% of their assets.

Half of the tax reserves are accounted for by only 27 (4%) of the 601 companies.

Median tax reserves represented 0.9% of revenues and 0.6% of assets.

Adoption of FIN 48 increased total tax reserves by $1.3 billion. The median impact on
    tax reserves was $0.

Adoption of FIN 48 decreased shareholders’ equity by $1.8 billion. The median impact
    was $0.

Total tax reserves of reporting companies increased by $1.9 billion between the date of
    adoption of FIN 48 and the close of the fiscal year. The median increase was $0.6
    million.

II. Disclosure Compliance

On an overall basis the reporting companies covered by this Report had a Seigel Index of 91.3.

432 companies attained a Seigel Index score of at least 100, denoting satisfactory
    compliance with FIN 48’s disclosure requirements. 169 did not.

Companies were grouped into 5 segments by revenue size . No revenue group attained
    a Seigel Index of 100.

By revenue size, the largest companies – those with revenues of at least $25 billion –
    had the best Seigel Index score of about 95.

The smaller revenue sized companies – those in the $2 billion to $5 billion range – had
    the lowest Seigel Index score of 90.

Companies were also grouped into 37 segments by industry . The Seigel Index scores,
    by industry, ranged from a high of 103.4 to a low of 61.8.

By industry, only 10 of 37 industries attained a Seigel Index of 100 or better.

7 industries failed to earn a Seigel Index of at least 90.

The greatest area of noncompliance was the “12-month look-forward” rule of FIN 48,
    where 1 of every 8 companies failed to provide any disclosure.

III. Quantitative Tax Reserve Data

The analysis of the data disclosed by the reporting companies reveals that:

The result of the adoption of FIN 48 was: 280 companies increased their tax reserves
    by a total of $8.1 billion with a median increase of $7.5 million; 151 companies
    decreased their tax reserves by a total of $6.8 billion with a median decrease of $7.0
    million. Thus, the adoption of FIN 48 prompted changes to existing tax reserves
    totaling $14.9 billion.

The adoption of FIN 48 also resulted in adjustments to shareholders’ equity by 434
    companies for a net decrease of $1.8 billion.

The total amount of tax reserves at year end was $155.2 billion. This is up slightly
    from the $153.3 billion recorded at the beginning of the year and is explained
    principally by the impact of foreign currency exchange and acquisitions/divestitures.

For the year 2007: 321 companies increased their tax reserves by a total of $14.8
    billion with a median increase of $10.5 million; 221 companies decreased their tax
    reserves by a total of $12.9 billion with a median decrease of $12.6 million.

The net increase in tax reserves due to the adoption of FIN 48 plus the changes in
    2007 totaled $3.2 billion.

The median tax reserve for 2007 was $56 million, but ranged from a low of zero to a
    high of $6.3 billion.

A significant percentage of the tax reserves are accounted for by relatively few
    companies – half of the tax reserves are accounted for by 4% of the companies.

Accrued interest and penalties amounted to $26.0 billion.

The amount of a company’s tax reserves is loosely correlated with its size.

Click here for a copy of the first quarter edition of
The Seigel Tax Reserve Report

Click here for a copy of the second quarter edition of
The Seigel Tax Reserve Report

Click here for a copy of the third quarter edition of
The Seigel Tax Reserve Report

Click here for a copy of the 2008 full year update of
The Seigel Tax Reserve Report