E-Z-GO 2007 Annual Report Download - page 89

Notes to the Consolidated Financial Statements
68
The following table presents the breakdown between current and long-term net deferred tax assets:
December 29, December 30,
(In millions) 2007 2006
Current $ 243 $ 231
Long-term 310 414
$ 553 $ 645
Finance group deferred tax liability (472) (497)
Net deferred tax asset $ 81 $ 148
We have recognized a valuation allowance at December 29, 2007 and December 30, 2006 of $192 million and $159 million, respectively, to offset
certain deferred tax assets due to the uncertainty of realizing the related benefi ts.
We have net operating loss and credit carryforwards at the end of each year as follows:
(In millions) 2007 2006
Non-U.S. net operating loss carryforwards with no expiration $ 175 $ 146
Non-U.S. net operating loss carryforwards expiring through 2022 14 15
Federal and state credit carryforwards beginning to expire in 2017 15 11
Federal credit carryforwards – discontinued operations — 60
Our income taxes payable for federal and state purposes have been reduced by the tax benefi ts we receive from employee stock options. The
income tax benefi ts we receive for certain stock options are calculated as the difference between the fair market value of the stock issued at the
time of exercise and the option price, tax effected. These excess net tax benefi ts related to employee stock options are presented in the
Consolidated Statements of Cash Flows as fi nancing activities.
The undistributed earnings of our foreign subsidiaries approximated $542 million at the end of 2007. We consider the undistributed earnings
on which taxes have not previously been provided to be indefi nitely reinvested; therefore, tax is not provided on these earnings. If the earnings
on which tax has not been provided had been distributed in 2007, our taxes, net of foreign tax credits, would have increased by approximately
$32 million.
Note 14. Special Charges
There were no special charges in 2007 or 2006. In 2005, special charges totaled $118 million and included $112 million related to the 2001
disposition of the Automotive Trim (“Trim”) business and $6 million in restructuring expense in the Industrial segment.
In 2005, the $112 million in special charges that were incurred in connection with the disposition of Trim included $91 million in impairment
charges to write down preferred stock acquired in the disposition and $21 million to cover exposures related to certain guarantees for leases,
environmental and workers’ compensation matters.
Note 15. Commitments and Contingencies
We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to
private sector transactions; government contracts; compliance with applicable laws and regulations; production partners; product liability;
employment; and environmental, safety and health matters. Some of these legal proceedings and claims seek damages, fi nes or penalties in
substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and
investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal
government procurement regulations, certain claims brought by the U.S. Government could result in our being suspended or debarred from U.S.
Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and
claims will have a material effect on our fi nancial position or results of operations.