Motorola 2011 Annual Report Download - page 88

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82
Significant components of deferred tax assets (liabilities) are as follows:
December 31 2011 2010
Inventory $38$ 114
Accrued liabilities and allowances 254 231
Employee benefits 1,279 1,083
Capitalized items 290 386
Tax basis differences on investments 44 40
Depreciation tax basis differences on fixed assets 13 66
Undistributed non-U.S. earnings (275) (481)
Tax carryforwards 1,438 1,617
Business reorganization 13 24
Warranty and customer reserves 44 56
Deferred revenue and costs 218 242
Valuation allowances (366) (502)
Deferred charges 39 37
Other (46) (124)
$2,983 $2,789
At December 31, 2011 and 2010, the Company had valuation allowances of $366 million and $502 million,
respectively, against its deferred tax assets, including $336 million and $187 million, respectively, relating to
deferred tax assets for non-U.S. subsidiaries. The Company’s valuation allowances for its non-U.S. subsidiaries had
a net increase of $149 million during 2011. The increase in the valuation allowance relating to deferred tax assets of
non-U.S. subsidiaries includes adjustments for current year activity, exchange rate variances and a $37 million
increase for loss carryforwards the Company expects to expire unutilized. In the first quarter of 2011, the Company
reassessed its valuation allowance requirements taking into consideration the Distribution of Motorola Mobility.
The Company evaluated all available evidence in its analysis, including the historical and projected pre-tax profits
generated by the Motorola Solutions U.S. operations. The Company also considered tax planning strategies that are
prudent and can be reasonably implemented. During 2011, the Company recorded $274 million of tax benefits
related to the reversal of a significant portion of the valuation allowance established on U.S. deferred tax assets. The
U.S. valuation allowance as of December 31, 2011 relates to state tax carryforwards the Company expects to expire
unutilized. The Company believes that the remaining deferred tax assets are more-likely-than-not to be realizable
based on estimates of future taxable income and the implementation of tax planning strategies.
Tax carryforwards are as follows:
December 31, 2011
Gross
Tax Loss
Tax
Effected
Expiration
Period
United States:
U.S. tax losses $ 79 $ 28 2018-2029
Foreign tax credits n/a 596 2017-2019
General business credits n/a 259 2023-2031
Minimum tax credits n/a 108 Unlimited
State tax losses 1,326 40 2012-2031
State tax credits n/a 30 2012-2026
Non-U.S. Subsidiaries:
China tax losses 529 132 2012-2016
Japan tax losses 109 44 2015-2020
United Kingdom tax losses 167 42 Unlimited
Germany tax losses 210 61 Unlimited
Singapore tax losses 86 15 Unlimited
Other subsidiaries tax losses 68 15 Various
Spain tax credits n/a 29 2018-2022
Other subsidiaries tax credits n/a 39 Various
$1,438