v2.4.0.6

Income Taxes (Tables)

12 Months Ended

Dec. 29, 2012

Income Tax Disclosure [Abstract]

Income before income taxes

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

		2012				2011				2010
U.S.		$	504			$	266			$	345
Foreign		1,641				1,393				1,249
		$	2,145			$	1,659			$	1,594

Details of income tax provision (benefit)

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

				2012				2011				2010
Current:		Federal		$	160			$	78			$	155
		Foreign		314				374				356
		State		35				9				15
				$	509			$	461			526
Deferred:		Federal		91				(83		)		(82		)
		Foreign		(57		)		(40		)		(29		)
		State		(6		)		(14		)		1
				28				(137		)		(110		)
				$	537			$	324			$	416

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:

		2012							2011							2010
U.S. federal statutory rate		$	751			35.0	%		$	580			35.0	%		$	558			35.0	%
State income tax, net of federal tax benefit		4				0.2			2				0.1			12				0.7
Statutory rate differential attributable to foreign operations		(165		)		(7.7	)		(218		)		(13.1	)		(235		)		(14.7	)
Adjustments to reserves and prior years		(47		)		(2.2	)		24				1.4			55				3.5
Net benefit from LJS and A&W divestitures		—				—			(72		)		(4.3	)		—				—
Change in valuation allowances		14				0.6			22				1.3			22				1.4
Other, net		(20		)		(0.9	)		(14		)		(0.9	)		4				0.2
Effective income tax rate		$	537			25.0	%		$	324			19.5	%		$	416			26.1	%

Details of deferred tax assets (liabilities)

The details of 2012 and 2011 deferred tax assets (liabilities) are set forth below:

		2012				2011
Operating losses and tax credit carryforwards		$	495			$	592
Employee benefits		251				260
Share-based compensation		108				106
Self-insured casualty claims		50				47
Lease-related liabilities		115				134
Various liabilities		82				75
Property, plant and equipment		39				55
Deferred income and other		57				35
Gross deferred tax assets		1,197				1,304
Deferred tax asset valuation allowances		(358		)		(368		)
Net deferred tax assets		$	839			$	936
Intangible assets, including goodwill		$	(256	)		$	(167	)
Property, plant and equipment		(95		)		(121		)
Other		(48		)		(48		)
Gross deferred tax liabilities		$	(399	)		$	(336	)
Net deferred tax assets (liabilities)		$	440			$	600

Reported in Consolidated Balance Sheets as:
Deferred income taxes – current		$	111			$	112
Deferred income taxes – long-term		481				549
Accounts payable and other current liabilities		(5		)		(16		)
Other liabilities and deferred credits		(147		)		(45		)
		$	440			$	600

Loss carryforwards, by year of expiration

At December 29, 2012, the Company has foreign operating and capital loss carryforwards of $1.0 billion and U.S. state operating loss, capital loss and tax credit carryforwards of $1.0 billion and U.S. federal capital loss and tax credit carryforwards of $0.2 billion.  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
		2013				2014-2017				2018-2032				Indefinitely				Total
Foreign		$	21			$	66			$	121			$	836			$	1,044
U.S. state		20				128				848				5				1,001
U.S. federal		—				107				103				—				210
		$	41			$	301			$	1,072			$	841			$	2,255

Unrecognized tax benefits reconciliation

The Company had $309 million and $348 million of unrecognized tax benefits at December 29, 2012 and December 31, 2011, respectively, $184 million and $197 million of which, if recognized, would impact the effective income tax rate.  A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

		2012				2011
Beginning of Year		$	348			$	308
Additions on tax positions - current year		50				85
Additions for tax positions - prior years		23				38
Reductions for tax positions - prior years		(90		)		(58		)
Reductions for settlements		(6		)		(8		)
Reductions due to statute expiration		(16		)		(22		)
Foreign currency translation adjustment		—				5
End of Year		$	309			$	348

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 – 2012
China		2009 – 2012
United Kingdom		2003 – 2012
Mexico		2006 – 2012
Australia		2008 – 2012

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 29, 2012, each of which is individually insignificant.

The accrued interest and penalties related to income taxes at December 29, 2012 and December 31, 2011 are set forth below:

		2012				2011
Accrued interest and penalties		$	50			$	53

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