Proctor and Gamble 2011 Annual Report Download - page 72

70 The Procter & Gamble CompanyNotes to Consolidated Financial Statements
Amounts in millions of dollars except per share amounts or as otherwise specified.
Deferred income tax assets and liabilities were comprised of the
following:
June30  2010
DEFERRED TAX ASSETS 
Pension and postretirement benefits $1,406 $1,717
Stock-based compensation 1,284 1,257
Loss and other carryforwards 874 595
Goodwill and other intangible assets 298 312
Accrued marketing and promotion 217 216
Fixed assets 111 102
Unrealized loss on financial and foreign
exchange transactions 770 88
Accrued interest and taxes 28 88
Inventory 52 35
Other 834 773
Valuation allowances (293)(120)
TOTAL5,581 5,063
DEFERRED TAX LIABILITIES 
Goodwill and other intangible assets 12,206 11,760
Fixed assets 1,742 1,642
Other 211 269
TOTAL14,159 13,671
Net operating loss carryforwards were $,663 and $1,875 at June30,
2011 and 2010, respectively. If unused, $1,019 will expire between 2012
and 2031. The remainder, totaling $1,644 at June30,2011, may be
carried forward indefinitely.
NOTE 10
COMMITMENTS AND CONTINGENCIES
Guarantees
In conjunction with certain transactions, primarily divestitures, we may
provide routine indemnifications (e.g., indemnification for representa-
tions and warranties and retention of previously existing environmental,
tax and employee liabilities) for which terms range in duration and, in
some circumstances, are not explicitly defined. The maximum obligation
under some indemnifications is also not explicitly stated and, as a
result, the overall amount of these obligations cannot be reasonably
estimated. Other than obligations recorded as liabilities at the time of
divestiture, we have not made significant payments for these indem-
nifications. We believe that if we were to incur a loss on any of these
matters, the loss would not have a material effect on our financial
position, results of operations or cash flows.
In certain situations, we guarantee loans for suppliers and customers.
The total amount of guarantees issued under such arrangements is
not material.
Off-Balance Sheet Arrangements
We do not have off-balance sheet financing arrangements, including
variable interest entities, that have a material impact on our financial
statements.
Purchase Commitments and Operating Leases
We have purchase commitments for materials, supplies, services and
property, plant and equipment as part of the normal course of business.
Commitments made under take-or-pay obligations are as follows:
June30 2012 2013 2014 2015 2016 Thereafter
Purchase obligations $1,351 $762 $368 $154 $104 $273
Such amounts represent future purchases in line with expected usage
to obtain favorable pricing. Approximately 26% of our purchase
commitments relate to service contracts for information technology,
human resources management and facilities management activities
that have been outsourced to third-party suppliers. Due to the propri-
etary nature of many of our materials and processes, certain supply
contracts contain penalty provisions for early termination. We do not
expect to incur penalty payments under these provisions that would
materially affect our financial position, results of operations or cash flows.
We also lease certain property and equipment for varying periods.
Future minimum rental commitments under non-cancelable operating
leases, net of guaranteed sublease income, are as follows:
June30 2012 2013 2014 2015 2016 Thereafter
Operating leases $264 $224 $192 $173 $141 $505
Litigation
We are subject to various legal proceedings and claims arising out
ofour business which cover a wide range of matters such as govern-
mental regulations, antitrust and trade regulations, product liability,
patent and trademark matters, income taxes and other actions.
As previously disclosed, the Company is and has been subject to a
variety of investigations into potential competition law violations in
Europe by the European Commission and national authorities from
anumber of countries. These matters involve a number of other
consumer products companies and/or retail customers. The Company’s
policy is to comply with all laws and regulations, including all antitrust
and competition laws, and to cooperate with investigations by relevant
regulatory authorities, which the Company is doing. Competition and
antitrust law inquiries often continue for several years and, if violations
are found, can result in substantial fines.
In response to the actions of the European Commission and national
authorities, the Company launched its own internal investigations into
potential violations of competition laws. The Company has identified
violations in certain European countries and appropriate actions
were taken.