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73 Textron Inc. Annual Report • 2013
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 28,
2013
December 29,
2012
Deferred tax assets
Obligation for pension and postretirement benefits $ 358 $ 643
Accrued expenses* 182 205
Deferred compensation 161 180
Loss carryforwards 84 81
Allowance for credit losses 29 39
Inventory 18 30
Deferred income 14 29
Valuation allowance on finance receivables held for sale 7 40
Other, net 123 168
Total deferred tax assets 976 1,415
Valuation allowance for deferred tax assets (166) (165)
$ 810 $ 1,250
Deferred tax liabilities
Leasing transactions $ (184) $ (217)
Property, plant and equipment, principally depreciation (174) (138)
Prepaid pension and postretirement benefits (143) —
Amortization of goodwill and other intangibles (109) (110)
Total deferred tax liabilities (610) (465)
N
et deferred tax asse
t
$ 200 $ 785
* Accrued expenses includes warranty and product maintenance reserves, self-insured liabilities and interest.
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 28,
2013
December 29,
2012
Manufacturing group:
Other current assets $ 206 $ 256
Other assets 270 591
Other liabilities (147) —
Finance group - Other liabilities (129) (62)
N
et deferred tax asse
t
$ 200 $ 785
Our net operating loss and credit carryforwards at December 28, 2013 are as follows:
(In millions)
N
on-U.S. net operating loss with no expiration $ 95
N
on-U.S. net operating loss expiring through 2033 53
State net operating loss and tax credits, net of tax benefits, expiring through 2033 55
The undistributed earnings of our non-U.S. subsidiaries approximated $778 million at December 28, 2013. 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.