Northrop Grumman 2010 Annual Report Download - page 93

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The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal,
state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:
$ in millions 2010 2009
December 31
Deferred Tax Assets
Retirement benefits $1,745 $1,979
Provisions for accrued liabilities 775 815
Workers’ compensation 234 207
Stock-based compensation 104 83
Other 36 26
Gross deferred tax assets 2,894 3,110
Less valuation allowance
Net deferred tax assets 2,894 3,110
Deferred Tax Liabilities
Goodwill amortization 603 528
Depreciation and amortization 521 544
Purchased intangibles 262 259
Contract accounting differences 186 245
Gross deferred tax liabilities 1,572 1,576
Total net deferred tax assets $1,322 $1,534
Net deferred tax assets (liabilities) as presented in the consolidated statements of financial position are as follows:
$ in millions 2010 2009
December 31
Net current deferred tax assets $ 710 $ 524
Net non-current deferred tax assets 612 1,010
Total net deferred tax assets $1,322 $1,534
Foreign Income – As of December 31, 2010, the company had approximately $668 million of accumulated
undistributed earnings generated by its foreign subsidiaries. No deferred tax liability has been recorded on these
earnings since the company intends to permanently reinvest these earnings, thereby indefinitely postponing their
remittance. Should these earnings be distributed in the form of dividends or otherwise, the distributions would
be subject to U.S. federal income tax at the statutory rate of 35 percent, less foreign tax credits available to offset
such distributions, if any. In addition, such distributions would be subject to withholding taxes in the various tax
jurisdictions.
12. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS
Goodwill
Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which
they have been assigned. Impairment tests are performed at least annually and more often as circumstances
require. Any goodwill impairment, as well as the amortization of other purchased intangible assets, is charged
against the respective segment’s operating income. The annual impairment test for all segments was performed as
of November 30, 2010, with no indication of impairment. In performing the goodwill impairment tests, the
company uses a discounted cash flow approach corroborated by comparative market multiples, where appropriate,
to determine the fair value of its businesses. Accumulated goodwill impairment losses at December 31, 2010, and
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NORTHROP GRUMMAN CORPORATION