Honeywell 2007 Annual Report Download - page 93

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
As of January 1, 2007, we adopted the provisions of FIN 48 as described in Note 1. As of that date, we had
$744 million of unrecognized tax benefits. If recognized, approximately $575 million would be recorded as a
component of income tax expense. For year ended December 31, 2007, the Company decreased its
unrecognized tax benefits by $78 million due to the tax benefit from the favorable resolution of tax audits, partially
offset by foreign currency translation and additional reserves for various international and U.S. tax audit matters.
The net decrease was recorded as a benefit to income tax expense. As of December 31, 2007 we had $666
million of unrecognized tax benefits. If recognized, approximately $547 million would be recorded as a
component of income tax expense.
The following table summarizes the activity related to our unrecognized tax benefits:
Total
Balance at January 1, 2007 $ 744
Gross increases related to current period tax positions 68
Gross increases related to prior periods tax positions 100
Gross decreases related to prior periods tax positions (167)
Decrease related to settlements with Tax Authorities (101)
Expiration of the statute of limitations for the assessment of taxes —
Foreign Currency Translation 22
Balance at December 31, 2007 $ 666
In many cases our uncertain tax positions are related to tax years that remain subject to examination by the
relevant tax authorities. The following table summarizes these open tax years by major jurisdiction as of
December 31, 2007:
Jurisdiction
Open Tax Year
Examination in
progress Examination not yet
initiated
United States (1) 1998 – 2006 2007
United Kingdom 2001 – 2005 2006 – 2007
Canada (1) 2002 – 2004 2005 – 2007
Germany (1) 1998 – 2004 2005 – 2007
France 2000 – 2006 2007
Netherlands 2002 2004 – 2007
Australia N/A 2003 – 2007
China N/A 1997 – 2007
India 1999 – 2005 2006 – 2007
(1) includes federal as well as state, provincial or similar local jurisdictions, as applicable
Based on the outcome of these examinations, or as a result of the expiration of statute of limitations for
specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits for tax positions taken
regarding previously filed tax returns will materially change from those recorded as liabilities for uncertain tax
positions in our financial statements. In addition, the outcome of these examinations may impact the valuation of
certain deferred tax assets (such as net operating losses) in future periods. Based on the number of tax years
currently under audit by the relevant U.S federal, state and foreign tax authorities, the Company anticipates that
several of these audits may be finalized in the foreseeable future. However, based on the status of these
examinations, and the protocol of finalizing audits by the relevant tax authorities, which could include formal legal
proceedings, at this time it is not possible to estimate the impact of any amount of such changes, if any, to
previously recorded uncertain tax positions.