Avon 2012 Annual Report Download - page 87

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Uncertain Tax Positions
At December 31, 2012, we had $36.0 of total gross unrecognized tax benefits of which approximately $9.0 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, 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
Additions based on tax positions related to the current year 7.4
Additions for tax positions of prior years 9.3
Reductions for tax positions of prior years (3.7)
Reductions due to lapse of statute of limitations (6.4)
Reductions due to settlements with tax authorities (6.6)
Balance at December 31, 2012 $ 36.0
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. We had $6.2 at
December 31, 2012, and $12.9 at December 31, 2011, accrued for interest and penalties, net of tax benefit. We recorded benefits of $1.1,
$3.8, and $4.5 for interest and penalties, net of taxes during 2012, 2011 and 2010, respectively.
We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As of December 31, 2012, the tax years
that remained subject to examination by major tax jurisdiction for our most significant subsidiaries were as follows:
Jurisdiction Open Years
Brazil 2007-2012
China 2007-2012
Mexico 2007-2012
Poland 2007-2012
Russia 2011-2012
United States 2012
We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $15 to $25
within the next 12 months due to the closure of tax years by expiration of the statute of limitations and audit settlements.
NOTE 8. Financial Instruments and Risk Management
We operate globally, with manufacturing and distribution facilities in various locations around the world. We may reduce our exposure to
fluctuations in the fair value and cash flows associated with changes in interest rates and foreign exchange rates by creating offsetting
positions through the use of derivative financial instruments. Since we use foreign currency-rate sensitive and interest-rate sensitive
instruments to hedge a certain portion of our existing and forecasted transactions, we expect that any gain or loss in value of the hedge
instruments generally would be offset by decreases or increases in the value of the underlying forecasted transactions.