DuPont 2012 Annual Report Download - page 65
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(Dollars in millions, except per share)
The significant components of deferred tax assets and liabilities at December 31, 2012 and 2011, are as follows:
Depreciation $ — $ 1,696 $ — $ 1,781
Accrued employee benefits 5,198 167 5,562 252
Other accrued expenses 1,157 499 1,020 354
Inventories 249 68 199 39
Unrealized exchange gains/losses —56 — 35
Tax loss/tax credit carryforwards/backs 2,733 —2,854 —
Investment in subsidiaries and affiliates 81 92 46 259
Amortization of intangibles 58 1,335 69 1,399
Other 270 287 250 279
Valuation allowance (1,914) — (1,971) —
$ 7,832 $ 4,200 $8,029 $ 4,398
Net deferred tax asset $ 3,632 $ 3,631
An analysis of the company's effective income tax rate (EITR) on continuing operations is as follows:
Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 %
Exchange gains/losses10.1 (0.8) 2.2
Domestic operations2(2.3)(3.4)(3.3)
Lower effective tax rates on international operations-net 2(10.8)(11.7)(16.0)
Tax settlements (2.0)(0.2)(2.1)
Sale of a business —(2.3) —
20.0 % 16.6 % 15.8 %
1. Principally reflects the impact of non-taxable exchange gains and losses resulting from remeasurement of foreign currency-denominated monetary assets and liabilities. Further
information about the company's foreign currency hedging program is included in Note 20 under the heading Foreign Currency Risk.
2. On January 2, 2013, U.S. tax law was enacted which extends through 2013 several expired or expiring temporary business tax provisions. In accordance with GAAP, this
extension will be taken into account in the quarter in which the legislation was enacted (i.e. first quarter 2013). The company is still quantifying the impact of this law change;
however, it is expected that the retroactive 2012 benefit derived from these extenders will be approximately $70.
Consolidated income from continuing operations before income taxes for U.S. and international operations was as follows:
U.S. (including exports) $652 $701 $ 793
International 2,463 3,080 2,467
$ 3,115 $ 3,781 $ 3,260
The decrease in pre-tax earnings from continuing operations from 2011 to 2012 is primarily driven by pre-tax charges related to Imprelis ® and employee
separation/asset related charges in 2012, in addition to the results of the company's hedging program. See Note 3 and Note 16 for additional information. In
2012 and 2011, the U.S. recorded exchange losses associated with the hedging program of $157 and $133, respectively. 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 20 for additional
information regarding the company's hedging program.
F-17