Motorola 2014 Annual Report Download - page 67

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Derivative instruments activity, net of tax, included in Accumulated other comprehensive loss within the consolidated
statements of stockholders’ equity for the years ended December 31, 2014, 2013 and 2012 were as follows:
2014 2013 2012
Balance at January 1 $ (1) $ 1 $ (3)
Increase (decrease) in fair value —(1) 3
Reclassifications to earnings, net of tax 1(1) 1
Balance at December 31 $ — $ (1) $ 1
6. Income Taxes
Components of earnings (loss) from continuing operations before income taxes are as follows:
Years ended December 31 2014 2013 2012
United States $ (1,355) $ 585 $ 566
Other nations 194 295 315
$ (1,161) $ 880 $ 881
Components of income tax expense (benefit) are as follows:
Years ended December 31 2014 2013 2012
United States $ 14 $ 29 $ 5
Other nations 67 234 91
States (U.S.) 11 12 1
Current income tax expense 92 275 97
United States (503) (368) 192
Other nations (11) 35 (29)
States (U.S.) (43) (1) (49)
Deferred income tax expense (benefit) (557) (334) 114
Total income tax expense (benefit) $ (465) $ (59) $ 211
Deferred tax balances that were recorded within Accumulated other comprehensive loss in the Company’s consolidated
balance sheets resulted from retirement benefit adjustments, currency translation adjustments, net gains (losses) on derivative
instruments and fair value adjustments to available-for-sale securities. The adjustments were $286 million, $606 million and
$(272) million for the years ended December 31, 2014, 2013 and 2012, respectively.
The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period
and, except for certain earnings that the Company intends to reinvest indefinitely due to the capital requirements of the foreign
subsidiaries or due to local country restrictions, accrues for the U.S. federal and foreign income tax applicable to the earnings.
During the fourth quarter of 2014, the Company reassessed its unremitted earnings position and concluded that certain of its
non-U.S. subsidiaries’ earnings were permanently reinvested overseas. The Company intends to utilize these offshore earnings
for working capital needs in its international operations. During 2014, the Company recorded a net tax benefit of $19 million
related to reversals of deferred tax liabilities related to undistributed foreign earnings due to the change in permanent
reinvestment assertion. During 2013, the Company reassessed its unremitted earnings position concluding that certain of its
non-U.S. subsidiaries' earnings were permanently reinvested overseas. As a result, the Company recognized a tax benefit of
$25 million during 2013 for the reversal of related deferred tax liabilities.
Undistributed earnings that the Company intends to reinvest indefinitely, and for which no income taxes have been
provided, aggregate to $1.5 billion December 31, 2014. The Company currently has no plans to repatriate the foreign earnings
permanently reinvested and therefore, the time and manner of repatriation is uncertain. If circumstances change and it becomes
apparent that some or all of the permanently reinvested earnings will be remitted to the U.S. in the foreseeable future, an
additional income tax charge may be necessary; however, given the uncertain repatriation time and manner at December 31,
2014, it is not practicable to estimate the amount of any additional income tax charge on permanently reinvested earnings. On a
cash basis, these repatriations from the Company's non-U.S. subsidiaries could require the payment of additional taxes. The
portion of earnings not reinvested indefinitely may be distributed without an additional charge given the U.S. federal and foreign
income tax accrued on undistributed earnings and the utilization of available foreign tax credits. At December 31, 2014, the
Company has approximately $400 million of foreign earnings not considered permanently reinvested and which may be
repatriated without an additional tax charge.
In 2013, the Company reorganized certain of its non-U.S. subsidiaries under a holding company structure in order to
facilitate the efficient movement of non-U.S. cash and provide a platform to fund foreign investments, such as potential