Pizza Hut 2010 Annual Report Download - page 203

106
Note 17 – Income Taxes
U.S. and foreign income before taxes are set forth below:
2010 2009 2008
U.S.
$
345 $ 269 $ 430
Forei
g
n 1,249 1,127 861
$
1
,
594 $ 1
,
396 $ 1
,
291
The details of our income tax provision (benefit) are set forth below:
2010 2009 2008
Current: Federal
$
155 $
(
21
)
$ 168
Forei
g
n 356 251 151
State 15 11
(
1
)
526 241 318
Deferred: Federal
(
82
)
92
(
12
)
Forei
g
n
(
29
)
(
30
)
3
State 1 10 10
(
110
)
72 1
$
416 $ 313 $ 319
The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth
below:
2010 2009 2008
U.S. federal statutory rate $ 558 35.0
%
$ 489 35.0% $ 452 35.0%
State income tax, net of federal tax benefit 12 0.7 14 1.0 5 0.6
Statutory rate differential attributable to foreign operations (235) (14.7) (159) (11.4) (187
)
(14.5)
Adjustments to reserves and prior years 55 3.5 (9) (0.6) 44 3.5
Change in valuation allowance 22 1.4 (9) (0.7) 12 0.6
Other, net 4 0.2 (13) (0.9) (7
)
(0.5)
Effective income tax rate $ 416 26.1
%
$ 313 22.4% $ 319 24.7%
Statutory rate differential attributable to foreign operations. This item includes local taxes, withholding taxes, and
shareholder-level taxes, net of foreign tax credits. The favorable impact is primarily attributable to a majority of our
income being earned outside of the U.S. where tax rates are generally lower than the U.S. rate.
In 2010, the benefit was positively impacted by the recognition of excess foreign tax credits generated by our intent to
repatriate current year foreign earnings.
In 2009, the benefit was negatively impacted by withholding taxes associated with the distribution of intercompany
dividends that were only partially offset by related foreign tax credits generated during the year.
Form 10-K