E-Z-GO 2007 Annual Report Download - page 88

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Textron Inc.
A reconciliation of our unrecognized tax benefi ts, excluding accrued interest, for 2007 is as follows:
(In millions)
Balance at December 30, 2006 $ 345
Additions based on tax positions related to the current year 33
Additions for tax positions of prior years 5
Reductions for tax positions of prior years (6)
Settlements (10)
Balance at December 29, 2007 $ 367
At December 29, 2007, approximately $241 million of these unrecognized tax benefi ts, if recognized, would favorably affect our effective tax rate
in any future period. The remaining $126 million in unrecognized tax benefi ts are related to discontinued operations. We do not expect the amount
of the unrecognized tax benefi ts disclosed above to change signifi cantly over the next 12 months.
In the normal course of business, we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as
Belgium, Canada, Germany, the United Kingdom and the United States. With few exceptions, we no longer are subject to U.S. federal, state and
local or non-U.S. income tax examinations for years before 1997 in these major jurisdictions.
During 2007, 2006 and 2005, we recognized approximately $28 million, $23 million and $14 million, respectively, in interest. At the end of 2007
and 2006, we had $101 million and $77 million, respectively, of accrued interest included in other liabilities on our Consolidated Balance Sheet.
The tax effects of temporary differences that give rise to signifi cant portions of our net deferred tax assets and liabilities were as follows:
December 29, December 30,
(In millions) 2007 2006
Deferred tax assets:
Deferred revenue $ 13 $ 16
Warranty and product maintenance reserves 109 115
Self-insured liabilities, including environmental 90 97
Deferred compensation 225 190
Allowance for credit losses 46 57
Loss carryforwards 85 79
Obligation for postretirement benefi ts 373 330
Foreign currency debt 26 21
Other, principally timing of other expense deductions 186 147
Total deferred tax assets 1,153 1,052
Valuation allowance for deferred tax assets (192) (159)
$ 961 $ 893
Deferred tax liabilities:
Finance group transactions, principally leasing $ (582) $ (597)
Property, plant and equipment, principally depreciation (89) (76)
Inventory (33) (53)
Amortization of goodwill and other intangibles (176) (19)
Total deferred tax liabilities (880) (745)
Net deferred tax asset $ 81 $ 148
67