Texas Instruments 2010 Annual Report Download - page 17

TEXAS INSTRUMENTS 2010 ANNUAL REPORT
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The primary components of deferred income tax assets and liabilities were as follows:
฀ December฀31,
฀ 2010 2009
Deferred income tax assets:
Inventories and related reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 525 $ 347
Postretirement benefit costs recognized in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 380
Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 339
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 219
Deferred loss and tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 201
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 71
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 49
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 98
1,965 1,704
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (2)
1,962 1,702
Deferred income tax liabilities:
Accrued retirement costs (defined benefit and retiree health care) . . . . . . . . . . . . . . . . . . . (190) (176)
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83) (53)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78) (68)
(351) (297)
Net deferred income tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,611 $1,405
As of December 31, 2010 and 2009, net deferred income tax assets of $1.61 billion and $1.41 billion were presented in the balance
sheets, based on tax jurisdiction, as deferred income tax assets of $1.70 billion and $1.47 billion and deferred income tax liabilities
of $86 million and $67 million. The increase in net deferred income tax assets from December 31, 2009, to December 31, 2010,
exceeds the $188 million deferred tax provision due to the recording of deferred tax assets associated with postretirement benefit costs
recognized in Accumulated other comprehensive income (AOCI). We make an ongoing assessment regarding the realization of U.S.
and non-U.S. deferred tax assets. While these assets are not assured of realization, our assessment is that a valuation allowance is not
required for the remaining balance of the deferred tax assets. This assessment is based on our evaluation of relevant criteria including
the existence of (a) deferred tax liabilities that can be used to absorb deferred tax assets, (b) taxable income in prior carryback years
and (c) expectations for future taxable income.
We have U.S. and non-U.S. tax loss carryforwards of approximately $257 million, of which $134 million expire through the
year 2024.
Provision has been made for deferred taxes on undistributed earnings of non-U.S. subsidiaries to the extent that dividend payments
from these subsidiaries are expected to result in additional tax liability. The remaining undistributed earnings (approximately $3.44 billion
at December 31, 2010) have been indefinitely reinvested; therefore, no provision has been made for taxes due upon remittance of these
earnings. It is not practicable to determine the amount of unrecognized deferred tax liability on these unremitted earnings.
Cash payments made for income taxes (net of refunds) were $1.47 billion, $331 million and $772 million for the years ended
December 31, 2010, 2009 and 2008.
Uncertain tax positions: We operate in a number of tax jurisdictions and are subject to examination of our income tax returns by tax
authorities in those jurisdictions who may challenge any item on these tax returns. Because the matters challenged by authorities are
typically complex, their ultimate outcome is uncertain. We recognize accrued interest related to uncertain tax positions and penalties as
components of OI&E. Before any benefit can be recorded in the financial statements, we must determine that it is “more likely than not”
that a tax position will be sustained by the appropriate tax authorities.