DuPont 2009 Annual Report Download - page 76

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
Consolidated income before income taxes for U.S. and international operations was as follows:
2009 2008 2007
United States (including exports) $ 171 $ 992 $1,652
International 2,013 1,399 2,091
$ 2,184 $2,391 $3,743
The drop in U.S. pre-tax earnings from 2008 to 2009 is primarily driven by two factors, overall decline in the U.S.
economy as well as exchange. In 2008 the U.S. recorded $141 of exchange gains associated with the hedging
program. However, in 2009, the program resulted in the company recording $485 of exchange losses. This swing in the
exchange gains and losses year over year combined with the underlying decline in the U.S. economy accounts for the
significant decrease in the U.S. earnings per the chart above. While the taxation of the amounts reflected on the chart
above does not correspond precisely to the jurisdiction of taxation (due to taxation in multiple countries, exchange
gains/losses, etc.), it represents a reasonable approximation of the income before income taxes split between U.S. and
international jurisdictions. See Note 24 for additional information regarding the company’s hedging program.
Under the tax laws of various jurisdictions in which the company operates, deductions or credits that cannot be fully
utilized for tax purposes during the current year may be carried forward or back, subject to statutory limitations, to
reduce taxable income or taxes payable in future or prior years. At December 31, 2009, the tax effect of such
carryforwards/backs, net of valuation allowance approximated $1,628. Of this amount, $1,326 has no expiration date,
$50 expires after 2009 but before the end of 2014 and $252 expires after 2014.
At December 31, 2009, unremitted earnings of subsidiaries outside the U.S. totaling $11,279 were deemed to be
indefinitely reinvested. No deferred tax liability has been recognized with regard to the remittance of such earnings. It is
not practical to estimate the income tax liability that might be incurred if such earnings were remitted to the U.S.
Each year the company files hundreds of tax returns in the various national, state and local income taxing jurisdictions
in which it operates. These tax returns are subject to examination and possible challenge by the taxing authorities.
Positions challenged by the taxing authorities may be settled or appealed by the company. As a result, there is an
uncertainty in income taxes recognized in the company’s financial statements in accordance with accounting for
income taxes and accounting for uncertainty in income taxes. In January 2007, the company implemented new
provisions for the accounting for uncertainty in income taxes, which defines criteria that an individual income tax
position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements
and provides guidance on measurement, derecognition, classification, accounting for interest in penalties, accounting
in interim periods, disclosure and transition.
The company and/or its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and
non-U.S. jurisdictions. With few exceptions, the company is no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for years before 1999. It is reasonably possible that net reductions
to the company’s global unrecognized tax benefits could be in the range of $50 to $75 within the next twelve months
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