Income And Deferred Taxes

12 Months Ended

Dec. 31, 2011

Income And Deferred Taxes [Abstract]

Income And Deferred Taxes

15. Income and Deferred Taxes

The Company operates in several tax jurisdictions primarily: the United States of America, Poland, Hungary, Russia and Ukraine. All subsidiaries file their own corporate tax returns as well as account for their own deferred tax assets and liabilities. The Company does not file a tax return in United States of America based upon its consolidated income, but does file a return in the United States based on the statements of operations for transactions occurring in the United States of America.

The Company adopted the provisions of ASC 740-10-25 "Income taxes." ASC 740-10-25 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC 740-10-25 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

The Company files income tax returns in the U.S., Poland, Hungary, Russia and Ukraine, as well as in various other countries throughout the world in which we conduct our business. The major tax jurisdictions and their earliest fiscal years that are currently open for tax examinations are 2006 in the U.S., 2006 in Poland and Hungary, 2008 in Russia and 2008 in Ukraine.

	Year ended December 31,
	2011			2010			2009
Tax at statutory rate	($	437,779	)	($	47,340	)	$	33,864
Tax rate differences		198,254			18,279			(15,259	)
Valuation allowance for net operating losses		71,621			29,675			2,611
Permanent differences		200,109			(28,728	)		(2,721	)
Income tax expense	$	32,205		($	28,114	)	$	18,495

Total income tax payments during 2011, 2010 and 2009 were $5,139 thousand, $29,544 thousand and $16,270 thousand respectively. CEDC has paid no U.S. income taxes and has net operating U.S. loss carry-forward totaling $23,332 thousand.

Significant components of the Company's deferred tax assets are as follows:

	December 31,
	2011			2010			2009
Deferred tax assets
Accrued expenses, deferred income and prepaid, net	$	10,999		$	11,163		$	15,693
Allowance for doubtful accounts receivable		3,050			6,493			6,252
Fair value adjustments from acquisitions in Russia		23,152			66,797			42,769
Unrealized foreign exchange losses		30,031			8,510			13,386
Net operating loss carry-forward benefit, gross		54,708			70,596			45,910
Valuation allowance		(74,071	)		(35,778	)		(4,380	)
Net deferred tax asset	$	47,869		$	127,781		$	119,630
Deferred tax liability
Trademarks		78,956			110,832			140,592
Unrealized foreign exchange gains		14,592			535			12,266
Remeasurement of previously held equity interest in subsidiaries		1,265			47,354			49,182
Property, plant and equipment revaluation		6,735			0			0
Customer relationships		1,425			0			0
Timing differences in finance type leases		339			349			0
Deferred income		1,265			276			563
ASC 470 impact		1,500			2,998			4,433
Other		3,989			8,980			1,036
Net deferred tax liability	$	110,064		$	171,324		$	208,072
Total net deferred tax asset		47,869			127,781			119,630
Total net deferred tax liability		110,064			171,324			208,072
Total net deferred tax		(62,195	)		(43,543	)		(88,442	)
Classified as
Current deferred tax asset		8,455			80,956			82,609
Non-current deferred tax asset		22,295			44,028			27,123
Non-current deferred tax liability		(92,945	)		(168,527	)		(198,174	)
Total net deferred tax	($	62,195	)	($	43,543	)	($	88,442	)

During the years ended December 31, 2011 and December 31, 2010, the Company recorded additional valuation allowances, associated with its Polish and Russian operations in the amounts of $74.1 million and $35.8 million, respectively. The valuation allowance relates primarily to losses carried forward, that we believe it is more likely than not that these losses will not be utilized in the future.

Tax losses can be carried forward for the following periods:

Hungary*	Unrestricted period
U.S.	20 years
Russia	10 years
Poland	5 years

* In some circumstances the Tax Office's permission to carry the loss forward is required.

Tax liabilities (including corporate income tax, Value Added Tax (VAT), social security and other taxes) of the Company's subsidiaries may be subject to examinations by the tax authorities for up to certain period from the end of the year the tax is payable, as follows:

Poland	5 years
Hungary	6 years
Russia	3 years

CEDC's state and federal income tax returns are also subject to examination by the U.S. tax authorities. The IRS is auditing the Company's 2009 and 2010 federal income tax returns. As the application of tax laws and regulations, and transactions are susceptible to varying interpretations, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.