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Newell Rubbermaid Inc. 2007 Annual Report
71
FOOTNOTE 16
Income Taxes
The Company adopted the provisions of FIN 48, on January 1, 2007. The adoption of FIN 48 did not result in an adjustment to beginning retained earnings.
However, the adoption of FIN 48 did result in the reclassification of certain income tax assets and liabilities from current to long-term in the Company’s
Consolidated Balance Sheet.
As of January 1, 2007, the Company had unrecognized tax benefits of $161.8 million, of which $160.7 million, if recognized, would affect the effective tax
rate. As of December 31, 2007, the Company had unrecognized tax benefits of $145.8 million, all of which, if recognized, would affect the effective tax rate.
The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. As of December 31,
2007 and January 1, 2007, the Company had recorded accrued interest expense related to the unrecognized tax benefits of up to $18.6 million and $12.6 million,
respectively. Due to statute expirations and examinations by various worldwide taxing authorities, $18.8 million of the unrecognized tax benefits could
reasonably change in the coming year.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits, including interest, is as follows (in millions):
Unrecognized tax benefits balance at January 1, 2007 $161.8
Increases in tax positions for prior years 29.6
Decreases in tax positions for prior years (1.3)
Increases in tax positions for current year 19.2
Settlements with taxing authorities (34.9)
Lapse of statute of limitations (28.6)
Unrecognized tax benefits balance at December 31, 2007 $145.8
The provision for income taxes consists of the following as of December 31, (in millions):
2007 2006 2005
Current:
Federal $ 81.3 $ (8.8) $ 29.7
State 4.0 1.0 5.4
Foreign 66.7 67.2 50.1
Total current 152.0 59.4 85.2
Deferred (2.3) (15.2) (28.1)
Total provision $149.7 $ 44.2 $ 57.1
The non-U.S. component of income from continuing operations before income taxes was $223.4 million in 2007, $231.2 million in 2006, and
$201.4 million in 2005.