Taco Bell 2004 Annual Report Download - page 70
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Please find page 70 of the 2004 Taco Bell annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.INCOMETAXES
NOTE22
Thedetailsofourincometaxprovision(benefit)aresetforth
below. Amounts do not include the income tax benefit of
approximately$1milliononthe$2millioncumulativeeffect
adjustment recorded on December29, 2002 due to the
adoptionofSFAS143.
2004 2003 2002
Current: Federal $ 78 $181 $137
Foreign 79 114 93
State (13) (4) 24
144 291 254
Deferred:Federal 41 (23) 29
Foreign 67 (16) (6)
State 34 16 (2)
142 (23) 21
$286 $268 $275
Includedinthefederaldeferredtaxprovisionaboveisapproxi-
mately$6millionintaxprovidedonundistributedearningsin
oneofourforeigninvestmentswhichweintendtorepatriate
totheU.S.Wehavemadethedeterminationtorepatriate
suchearningsastheresultofTheAmericanJobsCreation
Actof2004which became lawonOctober22,2004 (the
“Act”). The Act allows a dividends received deduction of
85%ofrepatriatedqualifiedforeignearningsinfiscalyear
2005.The$6millionintaxisbeingprovidedasaresultof
ourdeterminationtorepatriateapproximately$110millionat
December25,2004.InaccordancewithFASBStaffPosition
109-2,“AccountingandDisclosureGuidancefortheForeign
EarningsRepatriation Provisions withintheAmericanJobs
CreationActof2004,”wecontinuetoevaluatewhetherwe
willnowrepatriateotherundistributedearningsfromforeign
investmentsasaresultoftheAct.Therangeofadditional
amountsthatwemightrepatriatethroughtheAct’seffective
dateis$0toapproximately$400million.Theassociatedtax
ifsuchamountswererepatriatedinaccordancewiththeAct
wouldrangefrom$0to$20million.Wewill completethe
evaluationofwhichoftheseearningswewillrepatriate,ifany,
during2005.
Taxespayablewerereducedby$102million,$26million
and$49millionin2004,2003and2002,respectively,asa
resultofstockoptionexercises.
Valuationallowancesrelatedtodeferredtaxassetsin
foreigncountriesincreasedby$45million,$19millionand
$6millionin2004,2003and2002,respectively.Valuation
allowances in cer tain states increased by $6million
($4million, net of federal tax) and $1million ($1million,
netoffederaltax)in2003 and2002,respectively. These
increaseswereasaresultofdeterminingthatitismorelikely
thannotthatcertainlosscarryforwardswillnotbeutilized
priortoexpiration.
In2004,thedeferredforeigntaxprovisionincludeda
$1millioncredittoreflecttheimpactofchangesinstatu-
torytaxratesinvariouscountries.Thedeferredforeigntax
provisionfor2002includeda$2millioncredittoreflectthe
impactofchangesinstatutorytaxratesinvariouscountries.
U.S.and foreignincomebeforeincometaxes areset
forthbelow:
2004 2003 2002
U.S. $ 704 $669 $665
Foreign 322 217 193
$1,026 $886 $858
Thereconciliationofincometaxescalculatedat the U.S.
federaltaxstatutoryratetooureffectivetaxrateissetforth
below:
2004 2003 2002
U.S.federalstatutoryrate 35.0% 35.0% 35.0%
Stateincometax,
netoffederaltaxbenefit 1.3 1.8 2.0
ForeignandU.S.taxeffects
attributabletoforeignoperations (5.8) (3.6) (2.8)
Adjustmentstoreserves
andprioryears (6.7) (1.7) (1.8)
Foreigntaxcreditamended
returnbenefit — (4.1) —
Valuationallowanceadditions
(reversals) 4.2 2.8 —
Other,net (0.1) — (0.3)
Effectiveincometaxrate 27.9% 30.2% 32.1%
Theadjustmentstoreservesandprioryearsin2004was
primarilydrivenbythereversalofreservesassociatedwith
auditsthatweresettled.
Weamendedcertainprioryearreturnsin2003uponour
determinationthatitwasmorebeneficialtoclaimcrediton
ourU.S.taxreturnsforforeigntaxespaidthantodeductsuch
taxes,ashadbeendonewhenthereturnswereoriginallyfiled.
Thebenefitforamendingsuchreturnswillbenon-recurring.
The details of 2004 and 2003 deferredtaxliabilities
(assets)aresetforthbelow:
2004 2003
Intangibleassetsandproperty,
plantandequipment $ 153 $ 131
Other 209 126
Grossdeferredtaxliabilities $ 362 $ 257
Netoperatinglossandtaxcreditcarryforwards $(231) $(231)
Employeebenefits (111) (105)
Self-insuredcasualtyclaims (46) (52)
Capitalleasesandfuturerentobligations
relatedtosale-leasebackagreements (25) (20)
Variousliabilitiesandother (479) (362)
Grossdeferredtaxassets (892) (770)
Deferredtaxassetvaluationallowances 351 183
Netdeferredtaxassets (541) (587)
Netdeferredtax(assets)liabilities $(179) $(330)
ReportedinConsolidatedBalanceSheetsas:
Deferredincometaxes $(156) $(165)
Otherassets (89) (178)
Otherliabilitiesanddeferredcredits 52 —
Accountspayableandothercurrentliabilities 14 13
$(179) $(330)
68