8.	INCOME TAXES

The following table presents the 2011, 2010 and 2009 income tax expense (benefit):


	Year Ended December 31
	2011(1)		2010(2)		2009(3)
	(In thousands)
Current income taxes:
Federal	$	8,580	$	(48,528)	$	94,190
State		6,476		1,704		15,060
Foreign		598		2,050		3,295

Total current income tax expense (benefit)		15,654		(44,774)		112,545

Deferred income taxes:
Federal		(399,773)		107,094		33,704
State		(71,698)		9,715		5,132
Foreign		(994)		1,447		464

Total deferred income tax expense (benefit)		(472,465)		118,256		39,300

Total income tax expense (benefit)	$	(456,811)	$	73,482	$	151,845

(1)	Excludes $0.5 million in income tax expense related to discontinued operations.

(2)	Excludes $8.7 million in income tax benefit related to discontinued operations.

(3)	Excludes $0.3 million in income tax benefit related to discontinued operations.

The following table presents the 2011, 2010 and 2009 income (loss) from continuing operations before income taxes for our domestic and foreign operations:


	Year Ended December 31
	2011		2010		2009
	(In thousands)
United States	$	(2,082,457)	$	127,934	$	370,642
Other Countries		29,859		23,288		9,823

Total income (loss) from continuing operations before income taxes	$	(2,052,598)	$	151,222	$	380,465

The following is a reconciliation of income tax expense (benefit) computed at the U.S. federal statutory tax rate to income tax expense (benefit) reported in our Consolidated Statements of Operations:


	Year Ended December 31
	2011				2010				2009
	Amount		Percentage		Amount		Percentage		Amount		Percentage
	(In thousands, except percentages)
Tax expense at statutory rate	$	(718,409)		35.0%	$	52,928		35.0%	$	133,163		35.0%
State income taxes		(41,237)		2.0		5,855		3.9		14,476		3.8
Foreign taxes versus U.S. statutory rate		(8,188)		0.4		(4,792)		(3.2)		884		0.2
Nondeductible goodwill		305,657		(14.9)		—		—		—		—
Deferred tax asset adjustment		—		—		10,848		7.2		—		—
Exclusion of non-controlling interest tax benefit		5,792		(0.2)		3,057		2.0		4,876		1.3
Nondeductible compensation		1,322		(0.1)		2,713		1.8		3,434		0.9
Other		(1,748)		0.1		2,873		1.9		(4,988)		(1.3)

Total	$	(456,811)		22.3%	$	73,482		48.6%	$	151,845		39.9%

In 2010, we identified deferred tax asset balances associated with errors primarily related to periods prior to 2007. Since the effects of the errors are not material to the financial results for the year ending December 31, 2010 and were not material to any individual year prior to 2010, we adjusted our deferred tax assets and recorded a non-cash income tax charge of $10.8 million.

The tax effects of temporary differences giving rise to deferred income tax assets (liabilities) were:


	December 31
	2011(1)		2010(2)
	(In thousands)
Deferred income tax assets:
Accrued liabilities	$	166,469	$	128,469
Retirement plans and postretirement benefits		53,307		38,324
Share-based compensation		47,482		45,091
Receivables and inventories		20,562		26,218
Derivative instruments		40,359		24,866
Net operating loss carryforwards		30,881		28,902
State and foreign tax credits		10,070		11,143
Other		4,876		3,774
Valuation allowances		(9,176)		(7,660)

		364,830		299,127
Deferred income tax liabilities:
Intangible assets		(154,650)		(550,197)
Property, plant and equipment		(370,513)		(342,824)
Investment in unconsolidated affiliates		(22,731)		(21,167)

		(547,894)		(914,188)

Net deferred income tax liability	$	(183,064)	$	(615,061)

(1)	Includes $10.1 million of deferred tax assets related to uncertain tax positions.

(2)	Includes $14.3 million of deferred tax assets related to uncertain tax positions.

These net deferred income tax assets (liabilities) are classified in our Consolidated Balance Sheets as follows:


	December 31
	2011		2010
	(In thousands)
Current assets	$	109,475	$	141,653
Noncurrent liabilities		(292,539)		(756,714)

Total	$	(183,064)	$	(615,061)

As discussed in Note 6, in 2011, we identified that we had not set up a deferred tax liability for a trademark acquired as part of our acquisition of WhiteWave in 2002. We corrected this error as of December 31, 2011 and recorded an increase in deferred tax liabilities of $59.6 million with a corresponding increase to the goodwill attributable to our WhiteWave reporting unit.

At December 31, 2011, we had $30.9 million of tax-effected state and foreign net operating loss carryforwards and $10.1 million of state and foreign tax credits available for carryover to future years. These items are subject to certain limitations and begin to expire in 2012. A valuation allowance of $9.2 million has been established because we do not believe it is more likely than not that all of the deferred tax assets related to state and foreign net operating loss carryforwards, state credit carryforwards and foreign tax credit carryforwards will be realized prior to expiration. Our valuation allowance increased $1.5 million in 2011 for the expected nonutilization of certain state net operating loss carryforwards.

The following is a reconciliation of gross unrecognized tax benefits, including interest, recorded in our Consolidated Balance Sheets:


	December 31
	2011		2010		2009
	(In thousands)
Balance at beginning of year	$	58,165	$	72,611	$	41,400
Increases in tax positions for current year		15,531		1,245		5,204
Increases in tax positions for prior years		4,518		7,857		5,641
Acquired increases in tax positions for prior years		—		—		31,019
Decreases in tax positions for prior years		(31,162)		(18,295)		(4,181)
Settlement of tax matters		(4,066)		(3,884)		(5,249)
Lapse of applicable statutes of limitations		(1,285)		(1,369)		(1,223)

Balance at end of year	$	41,701	$	58,165	$	72,611

These unrecognized tax benefits are classified in our Consolidated Balance Sheets as follows:


	December 31
	2011		2010		2009
	(In thousands)
Accrued expenses	$	4,687	$	5,620	$	3,333
Other long-term liabilities		37,014		52,545		69,278

Total	$	41,701	$	58,165	$	72,611

Of the balance at December 31, 2011, $26.8 million would impact our effective tax rate and $4.8 million would be offset by tax benefits associated with potential transfer pricing adjustments, if recognized. The remaining $10.1 million represents tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Due to the impact of deferred income tax accounting, the disallowance of the shorter deductibility period would not affect our effective tax rate but would accelerate payment of cash to the applicable taxing authority. We do not expect any material changes to our liability for uncertain tax positions during the next 12 months.

We recognize accrued interest related to uncertain tax positions as a component of income tax expense. Penalties, if incurred, are recorded in general and administrative expenses in our Consolidated Statements of Operations. Income tax expense for 2011, 2010 and 2009 included interest expense, net of tax of $0, ($1.6) million, and $1.1 million, respectively. Our liability for uncertain tax positions included accrued interest of $4.1 million and $4.9 million at December 31, 2011 and 2010, respectively.

As of December 31, 2011, our 2008 to 2010 tax years remain subject to examination in our major jurisdictions. State income tax returns are generally subject to examination for a period of three to five years after filing. We have various state and foreign income tax returns in the process of examination, appeals or settlement.