Sunbeam 2011 Annual Report Download - page 59

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Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2011 (Dollars in millions, except per share data and unless otherwise indicated)
During 2011 and 2010, the change in the unrecognized tax benefits primarily relates to the expiration of certain statutes of
limitations, the redetermination of required reserves, and tax settlements made during the year. In 2011 and 2010, the decrease
in unrecognized tax benefits due to expiring statutes was $0.3 and $0.6, respectively. At December 31, 2011, the amount of gross
unrecognized tax benefits that, if recognized, would affect the reported tax rate is $56.4. The Company has indemnification for $1.4
of the gross unrecognized tax benefit from the sellers of acquired companies.
(In millions) 2011 2010
Unrecognized tax benefits, January 1, $ 55.7 $ 51.5
Increases (decreases):
Acquisitions — 1.8
Tax positions taken during the current period 3.4 3.3
Tax positions taken during a prior period (0.1) (1.3)
Settlements with taxing authorities (0.2) (1.9)
Other (1.0) 2.3
Unrecognized tax benefits, December 31, $ 57.8 $ 55.7
The Company continually reviews the adequacy of the valuation allowance. A valuation allowance is recorded if, based on the
weight of available evidence, it is more likely than not that a deferred tax asset will not be realized. This assessment is based on an
evaluation of the level of historical taxable income and projections for future taxable income. During 2011, the Company’s valuation
allowance decreased by $8.4 principally due to the ability to recognize certain foreign losses for which a valuation allowance was
previously established. During 2010, the Company’s valuation allowance was increased by $3.2 principally due to the inability to
benefit from certain foreign losses attributable to the Company’s 2010 acquisitions. During 2009, the Company’s valuation allowance
increased $4.1 due to the inability to benefit from certain state and foreign losses.
At December 31, 2011, the Company had net operating losses (“NOLs”) of approximately $935 for domestic tax purposes, none
of which are reflected in the consolidated financial statements. In 2011, the Company utilized approximately $8 of these previously
unrecognized U.S. federal NOLs in its consolidated financial statements. Additionally, approximately $784 of these domestic NOLs
are subject to varying limitations on their use under Section 382 of the Internal Revenue Code of 1986, as amended.
Deferred tax assets relating to tax benefits of employee equity compensation awards have been reduced by approximately $1.2 to
reflect exercises whereby the book expenses exceeds tax deductions that can be claimed. Certain vested and exercised employee
equity compensation awards have resulted in tax deductions in excess of previously recorded tax benefits based on the value of
such equity compensation awards at the time of grant (“windfalls”). Although the additional tax benefit for windfalls is reflected
in the tax return NOL carryforwards, the additional tax benefit associated with the windfalls is not recognized for financial
statement purposes until the deduction reduces taxes payable as recorded on the Company’s financial statements with an offset
to additional paid-in-capital. Windfall tax benefits of $3.0 were recognized in 2011. Windfall tax benefits of $33 are not reflected
in deferred tax assets.
The Company has also accumulated or acquired through acquisitions approximately $111 of foreign NOLs. Of the total foreign
NOLs, approximately $1 will expire in 2012. Approximately $35 of the foreign NOLs will expire in years subsequent to 2012, and
approximately $75 have an unlimited life.
The Company and/or its subsidiaries are subject to federal, state and foreign income tax audits. The Company believes that
adequate amounts have been reserved for any adjustments that may ultimately result from these examinations.
Generally, the Company intends to indefinitely reinvest undistributed earnings of certain of its foreign subsidiaries outside the
U.S. As a result, the Company has not provided for U.S. income taxes on undistributed foreign earnings of approximately $957 at
December 31, 2011. The Company intends to permanently reinvest these earnings in the future growth of its foreign businesses.
Determination of the amount of unrecognized deferred U.S. income liability is not practicable because of the complexities
associated with its hypothetical calculation. In 2011, 2010 and 2009, the Company recorded a deferred tax charge (benefit) of $7.5,
($2.4) and $23.7, respectively, related to profits that were deemed not to be permanently reinvested outside of the United States.
The following table sets forth the details and the activity related to unrecognized tax benefit as of and for the years ended
December 31, 2011 and 2010: