Ford Motor Company 2011 Annual Report : Page 159
FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS Notes to the Financial Statements NOTE 22. INCOME TAXES (Continued) We historically have provided deferred taxes for the presumed repatriation to the United States of earnings from nearly all non-U.S. subsidiaries. During 2011, we determined that $6.9 billion of these non-U.S. subsidiaries' undistributed earnings are now indefinitely reinvested outside the United States. As management has determined that the earnings of these subsidiaries are not required as a source of funding for U.S. operations, such earnings are not planned to be distributed to the U.S. in the foreseeable future. As a result of this change in assertion, deferred tax liabilities related to undistributed foreign earnings decreased by $63 million. As of December 31, 2011, $8.4 billion of non-U.S. earnings are considered indefinitely reinvested in operations outside the United States, for which deferred taxes have not been provided. These earnings have been subject to significant non-U.S. taxes; repatriation in their entirety would result in a residual U.S. tax liability of about $300 million. At the end of 2011, our U.S. operations had returned to a position of cumulative profits for the most recent three-year period. We concluded that this record of cumulative profitability in recent years, our ten consecutive quarters of pre-tax operating profits, our successful completion of labor negotiations with the UAW, and our business plan showing continued profitability, provide assurance that our future tax benefits more likely than not will be realized. Accordingly, at year-end 2011, we released almost all of our valuation allowance against net deferred tax assets for entities in the United States, Canada, and Spain. At December 31, 2011, we have retained a valuation allowance against approximately $500 million in North America related to various state and local operating loss carryforwards that are subject to restrictive rules for future utilization, and a valuation allowance totaling $1 billion primarily against deferred tax assets for our South American operations. Components of Deferred Tax Assets and Liabilities The components of deferred tax assets and liabilities at December 31 were as follows (in millions): 2011 Deferred tax assets Employee benefit plans Net operating loss carryforwards Tax credit carryforwards Research expenditures Dealer and customer allowances and claims Other foreign deferred tax assets Allowance for credit losses All other Total gross deferred tax assets Less: valuation allowances Total net deferred tax assets Deferred tax liabilities Leasing transactions Deferred income Depreciation and amortization (excluding leasing transactions) Finance receivables Other foreign deferred tax liabilities All other Total deferred tax liabilities Net deferred tax assets/(liabilities) $ 932 2,098 1,659 551 360 711 6,311 14,429 $ 928 2,101 1,146 716 334 1,613 6,838 868 $ 8,189 3,163 4,534 2,297 1,731 694 194 1,483 22,285 (1,545) 20,740 $ 6,332 4,124 4,546 2,336 1,428 1,513 252 2,839 23,370 (15,664) 7,706 2010 Operating loss carryforwards for tax purposes were $8.5 billion at December 31, 2011, resulting in a deferred tax asset of $3.2 billion. A substantial portion of these losses begin to expire in 2029; the remaining losses will begin to expire in 2018. Tax credits available to offset future tax liabilities are $4.5 billion. A substantial portion of these credits have a remaining carryforward period of 10 years or more. 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. 159 Ford Motor Company | 2011 Annual Report 159
Publication List
Using a screen reader? Click Here