Pizza Hut 2008 Annual Report Download - page 173

51
As a matter of course, we are regularly audited by federal, state and foreign tax authorities. Effective December 31, 2006,
we adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” an interpretation of Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes” (“FIN 48”). FIN 48 requires that a position taken or expected to be taken in a tax return be recognized in the
financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be
sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of
benefit that is greater than fifty percent likely of being realized upon settlement. At December 27, 2008, we had $296
million of unrecognized tax benefits, $225 million of which, if recognized, would affect the effective tax rate. Since
adopting FIN 48, we have evaluated unrecognized tax benefits, including interest thereon, on a quarterly basis to insure
that they have been appropriately adjusted for events, including audit settlements, which may impact our ultimate
payment for such exposures.
Additionally, we have not recorded the deferred tax impact for certain undistributed earnings from our foreign subsidiaries
totaling approximately $1.1 billion at December 27, 2008, as we believe these amounts are indefinitely reinvested. If our
intentions were to change in the future based on a change in circumstances, deferred tax may need to be provided that
could materially impact income taxes.
See Note 19 for a further discussion of our income taxes.
Form 10-K