Pizza Hut 2011 Annual Report Download - page 186

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Note 17 – Income Taxes
U.S. and foreign income before taxes are set forth below:
U.S.
Foreign
2011
$ 266
1,393
$ 1,659
2010
$ 345
1,249
$ 1,594
2009
$ 269
1,127
$ 1,396
The details of our income tax provision (benefit) are set forth below:
Current:
Deferred:
Federal
Foreign
State
Federal
Foreign
State
2011
$ 78
374
9
$ 461
(83)
(40)
(14)
(137)
$ 324
2010
$ 155
356
15
$ 526
(82)
(29)
1
(110)
$ 416
2009
$(21)
251
11
241
92
(30)
10
72
$ 313
The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below:
U.S. federal statutory rate
State income tax, net of federal tax benefit
Statutory rate differential attributable to foreign
operations
Adjustments to reserves and prior years
Net benefit from LJS and A&W divestitures
Change in valuation allowances
Other, net
Effective income tax rate
2011
$ 580
2
(218)
24
(72)
22
(14)
$ 324
35.0%
0.1
(13.1)
1.4
(4.3)
1.3
(0.9)
19.5%
2010
$ 558
12
(235)
55
—
22
4
$ 416
35.0%
0.7
(14.7)
3.5
—
1.4
0.2
26.1%
2009
$ 489
14
(159)
(9)
—
(9)
(13)
$ 313
35.0%
1.0
(11.4)
(0.6)
—
(0.7)
(0.9)
22.4%
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 2011 and 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.
Adjustments to reserves and prior years. This item includes: (1) the effects of reconciling income tax amounts recorded in our
Consolidated Statements of Income to amounts reflected on our tax returns, including any adjustments to the Consolidated Balance
Sheets; and (2) changes in tax reserves, including interest thereon, established for potential exposure we may incur if a taxing
authority takes a position on a matter contrary to our position. We evaluate these amounts on a quarterly basis to insure that they
have been appropriately adjusted for audit settlements and other events we believe may impact the outcome. The impact of certain
effects or changes may offset items reflected in the ‘Statutory rate differential attributable to foreign operations’ line.
Form 10-K