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Newell Rubbermaid Inc. 2007 Annual Report
73
Resolution of Tax Contingencies
2007
In 2007, the Company recorded a benefit of $35.0 million due to the Company entering into an agreement with the IRS relating to the appropriate treatment
of a specific deduction included in the Company’s 2006 U.S. federal income tax return. The Company requested accelerated review of the transaction under
the IRS’ Pre-Filing Agreement Program that resulted in affirmative resolution in 2007.
The Company recorded a $4.4 million net benefit due to certain accrual reversals for which the statute of limitations has expired partially offset by
provisions required for tax deductions recorded in prior periods.
The Company recorded a benefit of $1.9 million due to the receipt of an income tax refund, resulting in a reduction in the valuation allowance for deferred
tax assets.
2006
In 2006, the Company determined that it would be able to utilize certain capital loss carryforwards that it previously believed would expire unused. Accordingly,
the Company reversed an income tax valuation reserve of $3.6 million.
The Company completed the reorganization of certain legal entities in Europe which resulted in the recognition of an income tax benefit of $78.0 million.
In 2006, the statute of limitations on certain tax positions for which the Company had provided tax reserves, in whole or in part, expired resulting
in the reversal of the provisions and interest accrued thereon in the amount of $21.2 million.
2005
In January 2005, the Company reached agreement with the IRS relating to the appropriate treatment of a specific deduction included in the Company’s
2003 U.S. federal income tax return. The Company requested accelerated review of the transaction under the IRS’ Pre-Filing Agreement Program that
resulted in affirmative resolution in late January 2005. A $58.6 million benefit was recorded in income taxes for 2005 related to this issue.
In 2005, the statute of limitations on certain tax positions for which the Company had provided tax reserves, in whole or in part, expired resulting in
the reversal of the provisions and interest accrued thereon in the amount of $15.3 million.
FOOTNOTE 17
Other Expense (Income), Net
Other expense (income), net consists of the following for the years ended December 31, (in millions):
2007 2006 2005
Equity earnings $(0.1) $(0.9) $ (0.9)
Minority interest 3.1 3.6 2.8
Currency transaction loss 4.2 3.0 0.3
Gain on disposal of fixed assets
—
— (14.8)
Liquidation of foreign entity (1)
—
— (10.3)
Gain on debt extinguishment (2)
—
— (1.7)
Other 0.1 4.0 1.5
$ 7.3 $ 9.7 $(23.1)
(1) In December 2005, the Company liquidated a foreign subsidiary and terminated a cross currency interest rate swap that was designated as a hedge of the Company’s net investment in the
subsidiary. In connection with these actions, the Company recognized a net gain of $10.3 million in other income. The cash paid to terminate the swap was reflected in Other in the Company’s
cash flow from operations.
(2) See Footnote 10 for further information regarding debt extinguishment.