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Annual
Report
have a material impact on our financial position or results of operations. Some of these proposed adjustments are
pending resolution by the Appeals division of the IRS. Furthermore, the IRS is currently examining our returns
for fiscal years 2009 through 2011. We are also currently under income tax examination in Canada for fiscal
years 2004 and 2005, in Germany for fiscal years 2008 through 2011, and in Italy for fiscal years 2008 through
2011. We remain subject to income tax examination for several other jurisdictions including Canada for fiscal
years after 2005, in France for fiscal years after 2011, in Germany for fiscal years after 2011, in the United
Kingdom for fiscal years after 2011, and in Switzerland for fiscal years after 2007.
On January 18, 2011, we received a Corporation Notice of Reassessment (the "Notice") from the Canada
Revenue Agency ("CRA") claiming that we owe additional taxes, plus interest and penalties, for the 2004 and
2005 tax years. The incremental tax liability asserted by the CRA is $44 million, excluding interest and penalties.
The Notice primarily relates to transfer pricing in connection with the reimbursement of costs for services
rendered to our U.S. parent company by one of our subsidiaries in Canada. We do not agree with the CRA's
position and we have filed a Notice of Objection with the appeals department of the CRA. We do not believe the
CRA's position has merit and accordingly, we have not adjusted our liability for uncertain tax positions as a
result of the Notice. If, upon resolution, we are required to pay an amount in excess of our liability for uncertain
tax positions for this matter, the incremental amounts due would result in additional charges to income tax
expense. In determining such charges, we would consider whether any correlative relief should be included in the
form of additional tax deductions in the U.S should we decide to seek such relief.
The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if
any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued
for each year. Although potential resolution of uncertain tax positions involve multiple tax periods and
jurisdictions, it is reasonably possible that a reduction of up to $80 million of unrecognized tax benefits may
occur within the next 12 months, some of which, depending on the nature of the settlement or expiration of
statutes of limitations, may affect the Company's income tax provision and therefore benefit the resulting
effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any
settlements.
(11) FINANCING ARRANGEMENT
0.75% Convertible Senior Notes Due 2016
In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016
(the "Notes"). The Notes are senior unsecured obligations which pay interest semi-annually in arrears at a rate of
0.75 percent per annum on January 15 and July 15 of each year, beginning on January 15, 2012 and will mature
on July 15, 2016, unless earlier purchased or converted in accordance with their terms prior to such date. The
Notes are senior in right of payment to any unsecured indebtedness that is expressly subordinated in right of
payment to the Notes.
The Notes are convertible into cash and shares of our common stock based on an initial conversion value of
31.5075 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion
price of approximately $31.74 per share). Upon conversion of the Notes, holders will receive cash up to the
principal amount of each Note, and any excess conversion value will be delivered in shares of our common stock.
Prior to April 15, 2016, the Notes are convertible only if (1) the last reported sale price of the common stock for
at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on
the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 percent of the
conversion price ($41.26 per share) on each applicable trading day; (2) during the 5 business day period after any
10 consecutive trading day period in which the trading price per $1,000 principal amount of notes falls below
98 percent of the last reported sale price of our common stock multiplied by the conversion rate on each trading
day; or (3) specified corporate transactions, including a change in control, occur. On or after April 15, 2016 a
holder may convert any of its Notes at any time prior to the close of business on the second scheduled trading day
immediately preceding the maturity date. The conversion rate is subject to customary anti-dilution adjustments
(for example, certain dividend distributions or tender or exchange offer of our common stock), but will not be
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