Motorola 2004 Annual Report Download - page 110

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102 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
required in interpreting market information, the fair value of the long-term debt is not necessarily indicative of the
amount which could be realized in a current market exchange.
The fair values of the other Ñnancial instruments were not materially diÅerent from their carrying or contract
values at December 31, 2004.
6. Income Taxes
Components of earnings (loss) from continuing operations before income taxes are as follows:
Years Ended December 31
2004
2003 2002
United States $ 994 $ 679 $(3,121)
Other nations 2,258 697 1,050
$3,252 $1,376 $(2,071)
Components of income tax expense (beneÑt) are as follows:
Years Ended December 31
2004
2003 2002
United States $44$115 $ 162
Other nations 456 300 328
States (U.S.) 616 (1)
506 431 489
Deferred 555 17 (1,210)
$1,061 $448 $ (721)
Deferred tax charges (beneÑts) that were recorded within Non-Owner Changes to Equity in the consolidated
balance sheets resulted primarily from fair value adjustments to available-for-sale securities, losses on derivative
instruments and minimum pension liability adjustments. The adjustments were $(189) million, $440 million and
$(136) million for the years ended December 31, 2004, 2003 and 2002, respectively. Except for certain earnings
that the Company intends to reinvest indeÑnitely, provisions have been made for the estimated U.S. federal income
taxes applicable to undistributed earnings of non-U.S. subsidiaries. Undistributed earnings that the Company intends
to reinvest indeÑnitely, and for which no U.S. Federal income taxes has been provided, aggregate $5.6 billion,
$5.1 billion and $6.6 billion at December 31, 2004, 2003 and 2002, respectively. The portion of earnings not
reinvested indeÑnitely may be distributed substantially free of additional U.S. federal income taxes given the
U.S. federal tax provisions accrued on undistributed earnings and the utilization of available foreign tax credits.
The American Jobs Creation Act of 2004 provides for a favorable, one-time deduction for qualifying
repatriations of foreign earnings if made in 2004 or 2005. The Company has not yet completed its evaluation of the
eÅect of the new tax law on its plans for reinvestment or repatriation of foreign earnings. The Company will
evaluate its repatriation plans and the impact of the new tax provision throughout 2005.
DiÅerences between income tax expense (beneÑt) computed at the U.S. federal statutory tax rate of 35% and
income tax expense (beneÑt) are as follows:
Years Ended December 31
2004
2003 2002
Income tax expense (beneÑt) at statutory rate $1,138 $482 $(725)
Taxes on non-U.S. earnings (64) (69) 54
State income taxes 71 32 (88)
Research credits (74) (11) (19)
Foreign export sales (31) (16) (18)
Non-deductible acquisition charges 11 11 4
Goodwill impairments 44 26 Ì
Other (34) (7) 71
$1,061 $448 $(721)