Ford 2013 Annual Report Download - page 134

132 Ford Motor Company | 2013 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
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 United States 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, 2013, $7.5 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 $1 billion.
At the end of 2011, our U.S. operations had returned to a position of cumulative profits for the most recent 3-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 provided assurance that our future tax benefits more likely than not would 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.
Components of Deferred Tax Assets and Liabilities
The components of deferred tax assets and liabilities were as follows (in millions):
December 31,
2013
December 31,
2012
Deferred tax assets
Employee benefit plans $ 4,907 $ 8,079
Net operating loss carryforwards 2,364 2,417
Tax credit carryforwards 5,675 4,973
Research expenditures 2,236 2,321
Dealer and dealers’ customer allowances and claims 2,106 1,820
Other foreign deferred tax assets 1,567 1,790
Allowance for credit losses 143 146
All other 2,736 1,176
Total gross deferred tax assets 21,734 22,722
Less: valuation allowances (1,633)(1,923)
Total net deferred tax assets 20,101 20,799
Deferred tax liabilities
Leasing transactions 1,138 1,145
Deferred income 2,075 2,094
Depreciation and amortization (excluding leasing transactions) 2,430 1,561
Finance receivables 723 616
Other foreign deferred tax liabilities 311 379
All other 707 289
Total deferred tax liabilities 7,384 6,084
Net deferred tax assets/(liabilities) $ 12,717 $ 14,715
At December 31, 2013, we have a valuation allowance of $1.6 billion primarily for deferred tax assets related to our
South America operations.
Operating loss carryforwards for tax purposes were $7.6 billion at December 31, 2013, resulting in a deferred tax
asset of $2.4 billion. There is no expiration date for $4.2 billion of these losses. The remaining losses begin to expire in
2016, though a substantial portion expire beyond 2020. Tax credits available to offset future tax liabilities are $5.7 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.