Graco 2010 Annual Report Download - page 80

Newell Rubbermaid Inc. 2010 Annual Report
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76 NEWELL RUBBERMAID 2010 Annual Report
The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state
and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior
to 2005. During the year ended December 31, 2010, the Company settled its 2005 and 2006 U.S. federal income tax return
examinations, including all issues that were at the IRS Appeals Office, and as part of this settlement, entered into binding closing
agreements relating to specific issues under examination, resulting in a reduction to the Company’s unrecognized tax benefits in
the amount of $63.6 million, including relevant penalties and interest. In addition, the Company’s effective tax rate was favorably
impacted by $8.2 million due to the reversal of certain tax reserves upon resolution of a tax examination and was adversely
affected by $6.7 million due primarily to the write-off of deferred tax assets determined not to be realizable upon the vesting
of equity-based compensation. The Company’s Canadian income tax returns are subject to examination for years after 2003.
With few exceptions, the Company is no longer subject to other income tax examinations for years before 2006.
It is reasonably possible that there could be a change in the amount of the Company’s unrecognized tax benefits within the
next 12 months due to activities of the IRS or other taxing authorities, including proposed assessments of additional tax, possible
settlement of audit issues, or the expiration of applicable statutes of limitations. The range of the possible change in unrecognized
tax benefits within the next 12 months cannot be reasonably estimated at December 31, 2010.
The components of net deferred tax assets are as follows as of December 31, (in millions):
2010 2009
Deferred tax assets:
Accruals not currently deductible for tax purposes $ 187.2 $ 180.9
Postretirement liabilities 69.2 60.3
Inventory reserves — 3.7
Pension liabilities 97.2 88.4
Self-insurance liability 27.1 10.3
Foreign tax credit carryforward 139.6 97.1
Foreign net operating losses 321.5 275.8
Other 136.8 105.2
Total gross deferred tax assets 978.6 821.7
Less valuation allowance (419.8) (320.2)
Net deferred tax assets after valuation allowance $ 558.8 $ 501.5
Deferred tax liabilities:
Accelerated depreciation $ (53.8) $ (89.9)
Amortizable intangibles (283.3) (228.1)
Other (3.9) —
Total gross deferred tax liabilities (341.0) (318.0)
Net deferred tax assets $ 217.8 $ 183.5
Current deferred income tax assets $ 179.2 $ 183.8
Noncurrent deferred income tax assets (liabilities) 38.6 (0.3)
$ 217.8 $ 183.5
The foreign tax credit carryforwards expire from 2014 to 2020, and a majority of the foreign net operating loss carryforwards
do not expire except for $31.6 million expiring from 2016 to 2018. The increase in deferred tax asset valuation allowance relates
predominantly to foreign jurisdictions where the Company maintains a full valuation allowance on all deferred tax assets. No U.S.
deferred taxes have been provided on the undistributed non-U.S. subsidiary earnings that are considered to be indefinitely
invested. At December 31, 2010, the estimated amount of total unremitted non-U.S. subsidiary earnings is $568.7 million. It is
not practical to estimate the amount of U.S. tax that might be payable on the eventual remittance of such earnings.
Of the Company’s $2.7 billion of goodwill at December 31, 2010, approximately $1.1 billion is deductible for tax purposes.