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Taxation (Tables)

12 Months Ended

Dec. 31, 2011

Schedule of Income before Income Tax, Domestic and Foreign

	2011	2010	2009
Year to December 31,	$’M	$’M	$’M
	___________	___________	___________
Republic of Ireland	(65.9)	(170.0)	(232.3)
UK	45.3	35.4	62.8
US	747.6	745.5	552.2
Other jurisdictions	363.1	158.4	260.3
	___________	___________	___________
	1,090.1	769.3	643.0
	___________	___________	___________

Schedule of Components of Income Tax Expense (Benefit)

Year to December 31,
	2011	2010	2009
	$’M	$’M	$’M
	__________	__________	__________
Current income taxes:
Republic of Ireland	(1.8)	-	-
US federal tax	193.1	176.4	154.3
US state and local taxes	9.0	6.6	14.4
Other	40.0	25.9	16.8
	__________	__________	__________
Total current taxes	240.3	208.9	185.5
	__________	__________	__________

Deferred taxes:
Republic of Ireland	-	-	(1.0)
US federal tax	22.5	(6.0)	(24.5)
US state and local taxes	(4.6)	(9.8)	(32.2)
UK corporation tax	(1.0)	(0.1)	6.1
Other	(29.6)	(10.3)	4.6
	__________	__________	__________
Total deferred taxes	(12.7)	(26.2)	(47.0)
	__________	__________	__________
Total income taxes⁽¹⁾	227.6	182.7	138.5
	__________	__________	__________

(1) Total income taxes relate solely to continuing operations as there is no tax provision/(benefit) relating to discontinued operations for the years to December 31, 2011, 2010 or 2009.

Schedule of Effective Income Tax Rate Reconciliation

	Year to December 31,
		2011	2010	2009
		$’M	$’M	$’M
		___________	___________	___________
Income from continuing operations before income taxes and equity in earnings/ (losses) of equity method investees		1,090.1	769.3	643.0
		___________	___________	___________
Statutory tax rate⁽¹⁾		25.0%	25.0%	25.0%

Adjustments to derive effective rate:
Non-deductable items:
	US R&D credit	(4.7%)	(5.7%)	(5.2%)
	Effect of the convertible bond	0.8%	1.8%	2.0%
	Intangible asset amortization⁽²⁾	-	-	0.1%
	Intra-group items⁽³⁾	(7.7%)	(12.0%)	(11.8%)
	Other permanent items	(0.4%)	0.8%	2.2%
Other items:
Change in valuation allowance		2.1%	5.1%	1.3%
Difference in taxation rates		4.5%	11.0%	8.5%
Change in provisions for uncertain tax positions		(1.3%)	2.2%	2.3%
Prior year adjustment		0.8%	(4.2%)	(2.7%)
Change in tax rates		1.4%	-	1.9%
Other		0.4%	(0.2%)	(2.1%)
		___________	___________	___________
Provision for income taxes on continuing operations		20.9%	23.8%	21.5%
		___________	___________	___________

(1) In addition to being subject to the Irish Corporation tax rate of 25%, in 2011 the Company is also subject to income tax in other territories in which the Company operates, including: Canada (16.5%); France (33.3%); Germany (15%); Italy (27.5%); Luxembourg (21.0%); Malta (35%); the Netherlands (25.5%); Belgium (33.99%); Spain (30%); Sweden (26.3%); Switzerland (8.5%); United Kingdom (26.3%) and the US (35%). The rates quoted represent the headline federal income tax rates in each territory, and do not include any state taxes or equivalents or surtaxes or other taxes charged in individual territories, and do not purport to represent the effective tax rate for the Company in each territory.

(2) The permanent difference results from tax deductible amortization available following inter-company asset transfers for which the recognition of a deferred tax asset is prohibited.

(3) Intra-group items principally relate to the effect of inter-company dividends, capital receipts (either taxable or non-taxable) and other intra-territory eliminations, the pre-tax effect of which has been eliminated in arriving at the Company's consolidated income from continuing operations before income taxes, noncontrolling interests and equity in earnings/(losses) of equity method investees.

(4) Certain of our activities operate under a tax holiday which is effective through December 2021. The impact of the tax holiday is to reduce the effective tax rate by 1.7% during 2011 (2010: increase in the effective tax rate by 0.2%; 2009: nil effect).

Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

	2011	2010	2009
	$’M	$’M	$’M
	___________	___________	___________
Balance at January 1	290.8	254.0	228.7
Increases based on tax positions related to the current year	18.2	12.4	4.2
Decreases based on tax positions taken in the current year	(2.5)	(1.7)	(0.2)
Increases for tax positions taken in prior years	1.4	18.0	25.2
Decreases for tax positions taken in prior years	(12.0)	(3.2)	(19.4)
Decreases resulting from settlements with the taxing authorities	(25.7)	(6.5)	(16.1)
Decreases as a result of expiration of the statute of limitations	(0.5)	-	-
Foreign currency translation adjustments⁽¹⁾	(4.2)	17.8	31.6
	___________	___________	___________
Balance at December 31⁽²⁾	265.5	290.8	254.0
	___________	___________	___________

(1) Recognized within Other Comprehensive Income

(2) The full amount of which would affect the effective rate if recognized

Schedule of Deferred Tax Assets and Liabilities

	December 31,	December 31,
	2011	2010
	$’M	$’M
	____________	____________
Deferred tax assets:
Deferred revenue	6.0	9.2
Inventory & warranty provisions	43.3	33.1
Losses carried forward (including tax credits)	384.8	314.3
Provisions for sales deductions and doubtful accounts	119.5	101.3
Restructuring	0.7	1.1
Intangible assets	44.0	14.7
Share-based compensation	34.8	42.5
Excess of tax value over book value of fixed assets	0.0	24.3
Other	34.1	28.6
	____________	____________
Gross deferred tax assets	667.2	569.1
Less: valuation allowance	(211.8)	(200.0)
	____________	____________
	455.4	369.1
Deferred tax liabilities:
Intangible assets	(691.5)	(433.2)
Excess of book value over tax value of assets	(22.2)	-
	____________	____________
Net deferred tax liabilities	(258.3)	(64.1)
	____________	____________

Balance sheet classifications:
Deferred tax assets - current	207.6	182.0
Deferred tax assets - non-current	50.7	110.4
Deferred tax liabilities - current	-	(4.4)
Deferred tax liabilities - non-current	(516.6)	(352.1)
	____________	____________
	(258.3)	(64.1)
	____________	____________

Summary of Operating Loss and Tax Credit Carryforwards


	2011	2010
	$’M	$’M
	____________	____________
US federal tax NOLs	45.3	14.7
US state tax NOLs	19.8	16.6
UK NOLs	24.8	30.4
Republic of Ireland NOLs	58.0	66.0
Foreign tax jurisdictions	174.7	80.4
R&D tax credits	62.1	106.2
	____________	____________

Schedule of Carryforwards Available to Reduce Future Taxes, Expiration Periods

		December 31,
		2011
		$’M
		___________
Within 1 year		0.1
Within 2 to 3 years		0.8
Within 3 to 4 years		1.1
Within 4 to 5 years		1.8
Within 5 to 6 years		3.3
After 6 years		115.4
Indefinitely		262.2

- 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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