Sara Lee 2011 Annual Report Download - page 115

The deferred tax liabilities (assets) at the respective year-ends
were as follows:
In millions 2011 2010 Deferred tax (assets) Pension liability $÷««÷÷– $(146) Employee benefits (137) (167) Unrealized foreign exchange (180) (49) Nondeductible reserves (94) (78) Net operating loss and other tax carryforwards (392) (357) Investment in subsidiary (257) – Other – (78) Gross deferred tax (assets) (1,060) (875) Less valuation allowances 414 215 Net deferred tax (assets) (646) (660) Deferred tax liabilities Property, plant and equipment $÷÷153 $«÷92 Pension asset ÷÷13 – Intangibles 22 101 Unrepatriated earnings 763 501 Other 38 – Deferred tax liabilities 989 694 Total net deferred tax (assets) liabilities $÷÷343 $÷«34
Tax-effected net operating loss and other tax carryforwards expire
as follows: $1 million in 2012, $1 million in 2013, $1 million in 2014, $2 million in 2015, $1 million in 2016, $3 million in 2017, $5 million in 2018, $3 million in 2019, $2 million in 2020, and $34 million in 2022 and beyond. There is no expiration date on $288 million of net operating loss carryforwards. Separately, there are state net operating losses of $51 million that begin to expire in 2012 through 2030.
Valuation allowances have been established on net operating
losses and other deferred tax assets in the United Kingdom, Belgium, Russia, Spain, and other foreign and U.S. state jurisdictions as a result of the corporation’s determination that there is less than a 50% likelihood that these assets will be realized.
The corporation records tax reserves for uncertain tax positions
taken, or expected to be taken, on a tax return. For those tax bene- fits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by the tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon audit settlement.
The corporation recognized income tax expense for continuing
operations of $14 million in 2011, $145 million in 2010 and $44 mil- lion in 2009 related to certain earnings outside of the U.S. which were not deemed to be indefinitely reinvested. The $145 million repatriation expense includes the $121 million charge explained above. Aside from the items mentioned above, the corporation intends to continue to invest a portion of its earnings outside of the U.S. and, therefore, has not recognized U.S. tax expense on these earnings. U.S. federal income tax and withholding tax on these foreign unremitted earnings would be approximately $200 million to $225 million.
Current and deferred tax provisions (benefits) were:
In millions 2011 2010 2009
Current Deferred Current Deferred Current Deferred
U.S. $÷13 $(23) $(229) $204 $÷42 $(48) Foreign 92 64 176 (33) 130 (13)
State 5(2)424–
$110 $«39 $÷(49) $173 $176 $(61)
Cash payments for income taxes from continuing operations were
$291 million in 2011, $305 million in 2010 and $218 million in 2009.
Sara Lee Corporation and eligible subsidiaries file a consolidated
U.S. federal income tax return. The company uses the asset-and- liability method to provide income taxes on all transactions recorded in the consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of tempo- rary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax liability or asset for each temporary difference is determined based upon the tax rates that the company expects to be in effect when the underlying items of income and expense are realized. The company’s expense for income taxes includes the current and deferred portions of that expense. A valuation allowance is established to reduce deferred tax assets to the amount the company expects to realize.
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