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76 Textron Inc. Annual Report ● 2012
payments provided below reflect expected future employee service, as appropriate, are expected to be paid, net of estimated
participant contributions. These payments are based on the same assumptions used to measure our benefit obligation at the end of
fiscal 2012. While pension benefit payments primarily will be paid out of qualified pension trusts, we will pay postretirement
benefits other than pensions out of our general corporate assets. Benefit payments that we expect to pay are as follows:
(In millions) 2013 2014 2015 2016 2017 2018-2022
Pension benefits $ 353 $ 356 $ 360 $ 367 $ 373 $ 2,003
Post-retirement benefits other than pensions 54 52 50 49 46 191
Note 14. Income Taxes
We conduct business globally and, as a result, file numerous consolidated and separate income tax returns within and outside the
U.S. For all of our U.S. subsidiaries, we file a consolidated federal income tax return. Income from continuing operations before
income taxes is as follows:
(In millions) 2012 2011 2010
U.S. $ 644 $ 137 $ (63)
N
on-U.S. 197 200 149
Total income from continuing operations before income taxes $ 841 $ 337 $ 86
Income tax expense (benefit) for continuing operations is summarized as follows:
(In millions) 2012 2011 2010
Current:
Federal $ 40 $ (23) $ (79)
State 9 15 3
Non-U.S. 29 29 19
78 21 (57)
Deferred:
Federal 169 67 59
State 23 1 (5)
Non-U.S. (10) 6 (3)
182 74 51
Income tax expense (benefit) $ 260 $ 95 $ (6)
The current federal and state provisions for 2012 and 2011 included $25 million and $37 million, respectively, of tax related to the
sale of certain leveraged leases in the Finance segment for which we had previously recorded significant deferred tax liabilities.
The following table reconciles the federal statutory income tax rate to our effective income tax rate for continuing operations:
2012 2011 2010
Federal statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
State income taxes 2.2 3.1 (2.7)
Non-U.S. tax rate differential and foreign tax credits (5.4) (9.4) (60.5)
Unrecognized tax benefits and interest 0.2 1.2 17.5
Cash surrender value of life insurance (0.5) (1.5) (5.1)
Nondeductible healthcare claims — —12.7
Change in status of subsidiaries — —12.0
Research credit — (2.5) (5.4)
Valuation allowance on contingent receipts — —(2.0)
Other, net (0.6) 2.2 (7.9)
Effective rate 30.9% 28.1% (6.4)%