Pizza Hut 2009 Annual Report Download - page 193

102
Note 19 – Income Taxes
The details of our income tax provision (benefit) are set forth below:
2009 2008 2007
Current: Federal
$
(
21
)
$ 168 $ 175
Forei
g
n 251 151 151
State 11
(
1
)
(
3
)
241 318 323
Deferred: Federal 92
(
12
)
(
71
)
Forei
g
n
(
30
)
3 27
State 10 10 3
72 1
(
41
)
$
313 $ 319 $ 282
For 2009, the current federal tax benefit resulted from the favorable impact for pension contributions made during the year
and lower U.S. taxable income. The benefit associated with pension contributions was fully offset in the deferred federal
provision. Also, for 2009, the current foreign tax provision included tax expense primarily related to continued growth in
the China business as well as withholding tax expense associated with the distribution of intercompany dividends.
The deferred tax provision includes $26 million, $30 million and $120 million of benefit in 2009, 2008 and 2007,
respectively, for changes in valuation allowances due to changes in determinations regarding the likelihood of the use of
certain deferred tax assets that existed at the beginning of the year. The deferred tax provision also includes $16 million,
$43 million and $16 million in 2009, 2008 and 2007, respectively, for increases in valuation allowances recorded against
deferred tax assets generated during the year. The increase for 2008 includes a full valuation allowance for net operating
losses generated by certain tax planning strategies implemented during the year. Total changes in valuation allowances,
including the impact of foreign currency translation and other adjustments, were decreases of $67 million, $54 million and
$37 million in 2009, 2008 and 2007, respectively. See additional discussion of valuation allowance adjustments in the
effective tax rate discussion on the following page.
The deferred foreign tax provision includes less than $1 million of expense in 2009 and 2008, respectively, and $17
million of expense in 2007 for the impact of changes in statutory tax rates in various countries. The deferred foreign tax
provision in 2008 includes $36 million of expense offset by the same amount in the current foreign tax provision that
resulted from a tax law change. The $17 million of expense in 2007 includes $20 million for the Mexico tax law change
enacted during the fourth quarter of 2007.
The deferred state tax provision in 2009 includes $10 million ($7 million, net of federal tax) of expense for the impact of
pension contributions made during the year. The deferred state tax provision in 2008 includes $18 million ($12 million,
net of federal tax) of expense for the impact associated with our plan to distribute certain foreign earnings. The deferred
state tax provision in 2007 includes $4 million ($3 million, net of federal tax) of benefit for the impact of state law
changes.
Form 10-K