Avon 2011 Annual Report Download - page 78

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The effective tax rate for the years ended December 31 was as follows:
2011 2010 2009
Statutory federal rate 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit (.4) (.3) .2
Taxes on foreign income, including translation (2.9) (2.1) (4.9)
Audit settlements, statute expirations and amended
returns (4.3) (2.5) (.7)
Net change in valuation allowances .1 (.2) 3.4
Venezuela devaluation and highly inflationary
accounting – 6.0 –
Other 1.6 1.1 (.8)
Effective tax rate 29.1% 37.0% 32.2%
At December 31, 2011, we had tax loss carryforwards of $1,972.5. The loss carryforwards expiring between 2012 and 2026 are $130.8 and
the loss carryforwards which do not expire are $1,841.7. We also had minimum tax credit carryforwards of $35.9 which do not expire,
business credit carryforwards of $11.1 that will expire between 2020 and 2031, and foreign tax credit carryforwards of $282.1 that will
expire between 2018 and 2021.
Uncertain Tax Positions
At December 31, 2011, we had $36.0 of total gross unrecognized tax benefits of which approximately $33 would impact the effective tax
rate, if recognized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at December 31, 2008 $ 104.3
Additions based on tax positions related to the current year 16.8
Additions for tax positions of prior years 9.7
Reductions for tax positions of prior years (5.8)
Reductions due to lapse of statute of limitations (2.9)
Reductions due to settlements with tax authorities (8.7)
Balance at December 31, 2009 113.4
Additions based on tax positions related to the current year 7.5
Additions for tax positions of prior years 6.4
Reductions for tax positions of prior years (14.4)
Reductions due to lapse of statute of limitations (5.3)
Reductions due to settlements with tax authorities (23.3)
Balance at December 31, 2010 84.3
Additions based on tax positions related to the current year 1.2
Additions for tax positions of prior years 9.3
Reductions for tax positions of prior years (20.0)
Reductions due to lapse of statute of limitations (6.7)
Reductions due to settlements with tax authorities (32.1)
Balance at December 31, 2011 $ 36.0
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. We had $12.9 at
December 31, 2011, and $20.1 at December 31, 2010, accrued for interest and penalties, net of tax benefit. We recorded a benefit of $3.8
during 2011, a benefit of $4.5 during 2010 and an expense of $1.6 during 2009 for interest and penalties, net of taxes.