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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

U.S. and foreign income before taxes are set forth below:



	2011		2010		2009
U.S.	$	266	$	345	$	269
Foreign	1,393		1,249		1,127
	$	1,659	$	1,594	$	1,396

Details of income tax provision (benefit)

The details of our income tax provision (benefit) are set forth below:



		2011			2010			2009
Current:	Federal	$	78		$	155		$	(21	)
	Foreign	374			356			251
	State	9			15			11
		$	461		$	526		241

Deferred:	Federal	(83		)	(82		)	92
	Foreign	(40		)	(29		)	(30		)
	State	(14		)	1			10
		(137		)	(110		)	72
		$	324		$	416		$	313

Effective income tax and tax rate reconciliation

The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below:



	2011					2010					2009
U.S. federal statutory rate	$	580		35.0	%	$	558		35.0	%	$	489		35.0	%
State income tax, net of federal tax benefit	2			0.1		12			0.7		14			1.0
Statutory rate differential attributable to foreign operations	(218		)	(13.1	)	(235		)	(14.7	)	(159		)	(11.4	)
Adjustments to reserves and prior years	24			1.4		55			3.5		(9		)	(0.6	)
Net benefit from LJS and A&W divestitures	(72		)	(4.3	)	—			—		—			—
Change in valuation allowances	22			1.3		22			1.4		(9		)	(0.7	)
Other, net	(14		)	(0.9	)	4			0.2		(13		)	(0.9	)
Effective income tax rate	$	324		19.5	%	$	416		26.1	%	$	313		22.4	%

Details of deferred tax assets (liabilities)

The details of 2011 and 2010 deferred tax assets (liabilities) are set forth below:



	2011			2010
Operating losses and tax credit carryforwards	$	590		$	335
Employee benefits	259			171
Share-based compensation	106			102
Self-insured casualty claims	47			50
Lease-related liabilities	137			166
Various liabilities	72			89
Deferred income and other	49			97
Gross deferred tax assets	1,260			1,010
Deferred tax asset valuation allowances	(368		)	(306		)
Net deferred tax assets	$	892		$	704
Intangible assets, including goodwill	$	(147	)	$	(211	)
Property, plant and equipment	(92		)	(108		)
Other	(53		)	(29		)
Gross deferred tax liabilities	$	(292	)	$	(348	)
Net deferred tax assets (liabilities)	$	600		$	356



Reported in Consolidated Balance Sheets as:
Deferred income taxes – current	$	112		$	61
Deferred income taxes – long-term	549			366
Accounts payable and other current liabilities	(16		)	(20		)
Other liabilities and deferred credits	(45		)	(51		)
	$	600		$	356

Loss carryforwards, by year of expiration

These losses are being carried forward in jurisdictions where we are permitted to use tax losses from prior periods to reduce future taxable income and will expire as follows:



	Year of Expiration
	2012		2013-2016		2017-2031		Indefinitely		Total
Foreign	$	4	$	66	$	136	$	833	$	1,039
U.S. federal and state	22		192		1,770		5		1,989
	$	26	$	258	$	1,906	$	838	$	3,028

Unrecognized tax benefits reconciliation

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:



	2011			2010
Beginning of Year	$	308		$	301
Additions on tax positions - current year	85			45
Additions for tax positions - prior years	38			35
Reductions for tax positions - prior years	(58		)	(19		)
Reductions for settlements	(8		)	(41		)
Reductions due to statute expiration	(22		)	(10		)
Foreign currency translation adjustment	5			(3		)
End of Year	$	348		$	308

Summary of income tax examinations

The following table summarizes our major jurisdictions and the tax years that are either currently under audit or remain open and subject to examination:



Jurisdiction		Open Tax Years
U.S. Federal		2004 – 2011
China		2008 – 2011
United Kingdom		2003 – 2011
Mexico		2005 – 2011
Australia		2007 – 2011

In addition, the Company is subject to various U.S. state income tax examinations, for which, in the aggregate, we had significant unrecognized tax benefits at December 31, 2011, each of which is individually insignificant.

The accrued interest and penalties related to income taxes at December 31, 2011 and December 25, 2010 are set forth below:



	2011		2010
Accrued interest and penalties	$	53	$	48

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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- Definition

Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

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