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