3M 2011 Annual Report Download - page 75

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NOTE 8. Income Taxes
Income Before Income Taxes
(Millions) 2011 2010 2009
United States ........................................................................... $ 2,516 $ 2,778 $ 2,338
International ................................................................ ............. 3,515 2,977 2,294
Total ..................................................................................... $ 6,031
$ 5,755 $ 4,632
Provision for Income Taxes
(Millions) 2011 2010 2009
Currently payable .....................................................................
Federal ................................................................................. $ 431 $ 837 $ 88
State .................................................................................... 51
73 13
International ......................................................................... 861 796 586
Deferred ..................................................................................
Federal ................................................................................. 181 55 489
State .................................................................................... 12
43 56
International ......................................................................... 138 (212) 156
Total ................................................................................. $ 1,674 $ 1,592 $ 1,388
Components of Deferred Tax Assets and Liabilities
(Millions) 2011 2010
Deferred tax assets:
Accruals not currently deductible ....................................................................
Employee benefit costs .............................................................................. $ 96 $ 99
Product and other claims ........................................................................... 155 148
Miscellaneous accruals .............................................................................. 173 175
Pension costs ................................................................................................ 1,183 724
Stock-based compensation ........................................................................... 483 501
Net operating/capital loss carryforwards ....................................................... 392 437
Foreign tax credits ......................................................................................... 286 281
Other - net ...................................................................................................... 49 46
Gross deferred tax assets ................................................................................. 2,817 2,411
Valuation allowance .......................................................................................... (82) (128 )
Total deferred tax assets ................................................................................... $ 2,735 $ 2,283
Deferred tax liabilities:
Product and other insurance receivables ...................................................... $ (63) $ (59 )
Accelerated depreciation ............................................................................... (745) (695 )
Intangible amortization .................................................................................. (798) (823 )
Total deferred tax liabilities ............................................................................... (1,606) (1,577 )
Net deferred tax assets ..................................................................................... $ 1,129 $ 706
The net deferred tax assets are included as components of Other Current Assets, Other Assets, Other Current
Liabilities, and Other Liabilities within the Consolidated Balance Sheet. See Note 5 “Supplemental Balance Sheet
Information” for further details.
As of December 31, 2011, the Company had tax effected federal, state, and international operating loss, capital loss,
and tax credit carryovers of approximately $17 million, $9 million, and $366 million (before valuation allowances). The
federal tax attribute carryovers will expire after eighteen to nineteen years, the state after five to ten years, and the
majority of international after eight years with the remaining international expiring in one year or with an indefinite
carryover period. The tax attributes being carried over arise as certain jurisdictions may have tax losses or may have
inabilities to utilize certain losses without the same type of taxable income. The Company has provided $82 million of
valuation allowance against certain of these deferred tax assets based on management’s determination that it is
more-likely-than-not that the tax benefits related to these assets will not be realized. The valuation allowance has
decreased from prior year due mainly to a change in tax law in certain jurisdictions extending the carryforward period
for which these tax attributes can be used to reduce the same type of taxable income. It is reasonably possible that