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78 Textron Inc. Annual Report ● 2012
The tax effects of temporary differences that give rise to significant portions of our net deferred tax assets and liabilities are as
follows:
(In millions)
December 29,
2012
December 31,
2011
Deferred tax assets
Obligation for pension and postretirement benefits $ 643 $ 635
Accrued expenses* 205 193
Deferred compensation 180 196
Loss carryforwards 81 74
Valuation allowance on finance receivables held for sale 40 130
Allowance for credit losses 39 68
Inventory 30 38
Deferred income 29 52
Other, net 168 172
Total deferred tax assets 1,415 1,558
Valuation allowance for deferred tax assets (165) (189)
$ 1,250 $ 1,369
Deferred tax liabilities
Leasing transactions $ (217) $ (285)
Property, plant and equipment, principally depreciation (138) (145)
Amortization of goodwill and other intangibles (110) (111)
Total deferred tax liabilities (465) (541)
N
et deferred tax asse
t
$ 785 $ 828
* Accrued expenses includes warranty and product maintenance reserves, self-insured liabilities, interest and restructuring reserves.
We believe that our earnings during the periods when the temporary differences become deductible will be sufficient to realize the
related future income tax benefits. For those jurisdictions where the expiration date of tax carryforwards or the projected operating
results indicate that realization is not more than likely, a valuation allowance is provided.
The following table presents the breakdown between current and long-term net deferred tax assets:
(In millions)
December 29,
2012
December 31,
2011
Current $ 256 $ 288
N
on-current 591 532
847 820
Finance group’s net deferred tax asset (liability) (62) 8
N
et deferred tax asse
t
$ 785 $ 828
Our net operating loss and credit carryforwards at December 29, 2012 are as follows:
(In millions)
N
on-U.S. net operating loss with no expiration $ 94
N
on-U.S. net operating loss expiring through 2032 50
State net operating loss and tax credits, net of tax benefits, expiring through 2032 49
U.S. federal tax credits beginning to expire in 2021 19
The undistributed earnings of our non-U.S. subsidiaries approximated $604 million at December 29, 2012. We consider the
undistributed earnings to be indefinitely reinvested; therefore, we have not provided a deferred tax liability for any residual U.S.
tax that may be due upon repatriation of these earnings. Because of the effect of U.S. foreign tax credits, it is not practicable to
estimate the amount of tax that might be payable on these earnings in the event they no longer are indefinitely reinvested.