Ford 2004 Annual Report Download - page 67

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NOTES TO THE FINANCIAL STATEMENTS
Annual tax provisions include amounts considered sufficient to pay probable assessments for examination of prior-year tax
returns by federal, foreign, state and local jurisdictions. Actual assessments may differ; however, we do not expect that such
an outcome would have a material effect on the future financial statements for a particular year, although such an outcome
is possible. No provision for deferred taxes has been made on $860 million of unremitted earnings (primarily earnings
for periods prior to 1998) that are considered to be indefinitely invested in non-U.S. subsidiaries. Deferred taxes for these
unremitted earnings are not practicable to estimate.
The components of deferred tax assets and liabilities at December 31 were as follows (in millions):
Operating loss carryforwards for tax purposes were $7.5 billion at December 31, 2004. A substantial portion of these losses
has an indefinite carryforward period; the remaining losses will begin to expire in 2005. Tax credits available to offset future
tax liabilities are $2.5 billion. A substantial portion has an indefinite carryforward period; the remainder begins to expire
in 2010. Tax benefits of operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review
of historical and projected future operating results, the eligible carryforward period, and other circumstances. Management
believes that it is more likely than not that the deferred tax assets will be realized.
On October 4, 2004, President Bush signed the Working Families Tax Relief Act of 2004, which retroactively reinstated the
research tax credit from the June 30, 2004 expiration date. The reinstatement of the research tax credit was reflected in our
fourth quarter 2004 results.
During the fourth quarter, we settled various issues related to federal and state audits of the period 1990 to 2000. The primary
settlement relates to foreign sales corporation claims. The acceptance by the Internal Revenue Service of these claims, as well as
the settlement of other issues related to the tax years ended 1999 to 2000, resulted in a tax benefit of $270 million.
NOTE 4. DISCONTINUED AND HELD-FOR-SALE OPERATIONS
Automotive Sector
Held-for-sale Operations. Consistent with our objectives to build on the basics and focus on core businesses, management
committed in December 2004 to sell certain consolidated dealerships in the Asia Pacific and Africa/Mazda segment. The
sale of these dealerships will allow us to concentrate on the production and marketing of our products in the Asia Pacific
region rather than the day-to-day retailing operations. We expect to sell these operations during the next twelve months and
have reported them as held for sale. We recorded a pre-tax charge of $16 million reflected in Income/(loss) before income
taxes related to the anticipated loss on the sale of the net assets. The charge represents the difference between the anticipated
selling price of the net assets, less costs to sell them, and their recorded book values. We also recorded a pre-tax goodwill
impairment of $64 million reflected in Income/(loss) before income taxes related to the disposal of these operations.
At December 31, 2004, the assets of the held-for-sale operations consisted primarily of receivables and
inventory totaling approximately $49 million and $114 million, respectively.
2004 2003
Deferred tax assets
Employee benefit plans $ 6,082 $ 6,721
Dealer and customer allowances and claims 3,196 3,177
Tax credit carryforwards 2,452 2,370
Other foreign deferred tax assets 2,639 2,012
Allowance for credit losses 1,957 1,930
All other 5,859 5,196
Total deferred tax assets 22,185 21,406
Deferred tax liabilities
Leasing transactions 7,662 7,956
Depreciation and amortization (excluding leasing transactions) 7,234 6,511
Finance receivables 2,826 2,953
All other 5,804 5,036
Total deferred tax liabilities 23,526 22,456
Net deferred tax assets/(liabilities) $ (1,341) $ (1,050)