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Newell Rubbermaid Inc. 2010 Annual Report
>
NEWELL RUBBERMAID 2010 Annual Report 75
FOOTNOTE 16
INCOME TAXES
As of December 31, 2010 and 2009, the Company had unrecognized tax benefits of $96.8 million and $147.9 million, respectively.
If recognized, $90.4 million and $141.4 million as of December 31, 2010 and 2009, respectively, would affect the effective tax
rate. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax
expense. As of December 31, 2010 and 2009, the Company had recorded accrued interest and penalties related to the unrecognized
tax benefits of $16.3 million and $43.7 million, respectively. During the years ended December 31, 2010 and 2009, the Company
recognized income tax (benefit) expense of $(27.4) million and $8.7 million, respectively, due to the (reduction) increase in the
reserves for interest and penalties.
The following table summarizes the changes in gross unrecognized tax benefits for the years ended December 31, (in millions):
2010 2009
Unrecognized tax benefits balance at January 1, $147.9 $135.0
Increase in tax positions for prior years 8.0 2.5
Decreases in tax positions for prior years (41.9) (0.1)
Increases in tax positions for current year 16.7 11.3
Settlements with taxing authorities (31.1) (0.8)
Lapse of statute of limitations (2.8) —
Unrecognized tax benefits balance at December 31, $ 96.8 $147.9
The provision for income taxes consists of the following for the years ended December 31, (in millions):
2010 2009 2008
Current:
Federal $(63.6) $ 56.4 $ (6.0)
State (0.5) 8.1 4.7
Foreign 77.7 63.3 46.2
Total current 13.6 127.8 44.9
Deferred (6.1) 14.9 8.7
Total provision $ 7.5 $142.7 $53.6
The non-U.S. component of income before income taxes was $246.9 million, $171.5 million and $208.4 million in 2010, 2009
and 2008, respectively.
A reconciliation of the U.S. statutory rate to the effective income tax rate is as follows for the years ended December 31,:
2010 2009 2008
Statutory rate 35.0% 35.0% 35.0%
Add (deduct) effect of:
State income taxes, net of federal income tax effect 1.8 1.2 49.4
Foreign tax credit (9.9) (7.3) (1,255.2)
Foreign rate differential and other (4.0) 2.5 620.8
Resolution of tax contingencies, net of increases (19.8) (0.7) (570.7)
Tax basis differential on goodwill impairment — — 2,702.4
Valuation allowance reserve (decrease) increase (2.4) 0.9 (214.3)
Stock compensation 1.8 1.7 61.5
Effective rate 2.5% 33.3% 1,428.9%