Pizza Hut 2011 Annual Report Download - page 188

84
Reported in Consolidated Balance Sheets as:
Deferred income taxes – current
Deferred income taxes – long-term
Accounts payable and other current liabilities
Other liabilities and deferred credits
$ 112
549
(16)
(45)
$ 600
$ 61
366
(20)
(51)
$ 356
We have investments in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have not
provided deferred tax on the portion of the excess that we believe is essentially permanent in duration. This amount may become
taxable upon an actual or deemed repatriation of assets from the subsidiaries or a sale or liquidation of the subsidiaries. We estimate
that our total temporary difference upon which we have not provided deferred tax is approximately $1.7 billion at December 31,
2011. A determination of the deferred tax liability on this amount is not practicable.
At December 31, 2011, the Company has foreign operating and capital loss carryforwards of $1.0 billion and U.S. federal and
state operating loss and tax credit carryforwards of $2.0 billion. These losses are being carried forward in jurisdictions where we
are permitted to use tax losses from prior periods to reduce future taxable income and will expire as follows:
Foreign
U.S. federal and state
Year of Expiration
2012
$ 4
22
$ 26
2013-2016
$ 66
192
$ 258
2017-2031
$ 136
1,770
$ 1,906
Indefinitely
$ 833
5
$ 838
Total
$ 1,039
1,989
$ 3,028
We recognize the benefit of positions taken or expected to be taken in tax returns in the financial statements when it is more likely
than not that the position would be sustained upon examination by tax authorities. A recognized tax position is measured at the
largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.
The Company had $348 million and $308 million of unrecognized tax benefits at December 31, 2011 and December 25, 2010,
respectively, $197 million and $227 million of which, if recognized, would affect the 2011 and 2010 effective income tax rates,
respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
Beginning of Year
Additions on tax positions - current year
Additions for tax positions - prior years
Reductions for tax positions - prior years
Reductions for settlements
Reductions due to statute expiration
Foreign currency translation adjustment
End of Year
2011
$ 308
85
38
(58)
(8)
(22)
5
$ 348
2010
$ 301
45
35
(19)
(41)
(10)
(3)
$ 308
The Company believes it is reasonably possible its unrecognized tax benefits may decrease by approximately $89 million in the
next twelve months, including approximately $39 million which, if recognized upon audit settlement or statute expiration, would
affect the 2012 effective tax rate. Each position is individually insignificant.
The Company’s income tax returns are subject to examination in the U.S. federal jurisdiction and numerous foreign
jurisdictions. The following table summarizes our major jurisdictions and the tax years that are either currently under audit or
remain open and subject to examination:
Form 10-K