Honeywell 2011 Annual Report Download - page 76

expense as of December 31, 2011. For the years ended December 31, 2011 and 2010, the Company increased its unrecognized tax benefits by $58 million and
$37 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:
2011 2010 2009
Change in unrecognized tax benefits:
Balance at beginning of year $ 757 $ 720 $ 671
Gross increases related to current period tax positions 46 37 86
Gross increases related to prior periods tax positions 327 84 86
Gross decreases related to prior periods tax positions (56) (41) (77)
Decrease related to settlements with tax authorities (237) (23) (44)
Expiration of the statute of limitations for the assessment of taxes (12) (8) (8)
Foreign currency translation (10) (12) 6
Balance at end of year $ 815 $ 757 $ 720
Generally, 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, 2011:
Open Tax Year
Jurisdiction Examination in
progress Examination not yet
initiated
United States (1) 2001–2009 2005–2011
United Kingdom N/A 2010-2011
Canada(1) 2006-2010 2011
Germany(1) 2004-2009 2010-2011
France 2009-2010 2000–2008, 2011
Netherlands 2007-2009 2010-2011
Australia N/A 2009-2011
China 2009-2010 2006-2008, 2011
India 2000–2009 2010-2011
(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 not possible to estimate the impact of any amount of such changes, if any, to previously
recorded uncertain tax positions.
Unrecognized tax benefits for examinations in progress were $482 million, $274 million and $261 million, as of December 31, 2011, 2010, and 2009,
respectively. These increases are primarily due to an increase in tax examinations. Estimated interest and penalties related to the underpayment of income
taxes are classified as a component of Tax Expense in the Consolidated Statement of Operations and totaled $63 million, $33 million and $13 million for the
years ended December 31, 2011, 2010, and 2009, respectively. Accrued interest and penalties were $247 million, $183 million and $150 million, as of
December 31, 2011, 2010, and 2009, respectively.
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