Honeywell 2010 Annual Report Download - page 75

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Federal income taxes have not been provided on undistributed earnings of the majority of our international subsidiaries as it is our intention to reinvest
these earnings into the respective subsidiaries. At December 31, 2010 Honeywell has not provided for U.S. federal income and foreign withholding taxes on
approximately $6.0 billion of such earnings of our non-U.S. operations. It is not practicable to estimate the amount of tax that might be payable if some or all
of such earnings were to be repatriated, and foreign tax credits would be available to reduce or eliminate the resulting U.S. income tax liability.
We had $757 million, $720 million and $671 million of unrecognized tax benefits as of December 31, 2010, 2009, and 2008 respectively. If recognized,
$757 million would be recorded as a component of income tax expense as of December 31, 2010. For the years ended December 31, 2010 and 2009, the
Company increased its unrecognized tax benefits by $37 million and $49 million, respectively, due to additional reserves for various international and U.S.
tax audit matters, partially offset by adjustments related to our ongoing assessments of the likelihood and amount of potential outcomes of current and future
examinations, the expiration of various statute of limitations, and settlements with tax authorities. The following table summarizes the activity related to our
unrecognized tax benefits:
2010 2009 2008
Change in unrecognized tax benefits:
Balance at beginning of year $ 720 $ 671 $ 666
Gross increases related to current period tax positions 37 86 81
Gross increases related to prior periods tax positions 84 86 106
Gross decreases related to prior periods tax positions (41) (77) (54)
Decrease related to settlements with tax authorities (23) (44) (42)
Expiration of the statute of limitations for the assessment of taxes (8) (8) (64)
Foreign currency translation (12) 6 (22)
Balance at end of year $ 757 $ 720 $ 671
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, 2010:
Open Tax Year
Jurisdiction Examination in
progress Examination not yet
initiated
United States (1) 2000–2008 2005–2010
United Kingdom 2003-2008 2009-2010
Canada(1) 2005-2008 2009-2010
Germany(1) 2004-2008 2009-2010
France 2007-2009 2000–2006, 2010
Netherlands 2007-2008 2009-2010
Australia N/A 2008-2010
China 2000-2009 2010
India 1999–2008 2009-2010
(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, the protocol of finalizing audits by the relevant taxing authorities, and the possibility that the Company might challenge certain audit findings
(which could include formal legal proceedings), at this time it is
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