Income Taxes (Tables)

12 Months Ended

Dec. 29, 2012

Income Taxes

Income (loss) from continuing operations before income taxes

(In millions)	2012		2011		2010
U.S.	$	644	$	137	$	(63	)
Non-U.S.	197		200		149
Total income from continuing operations before income taxes	$	841	$	337	$	86

Income tax expense (benefit) for continuing operations

(In millions)	2012			2011			2010
Current:
Federal	$	40		$	(23	)	$	(79	)
State	9			15			3
Non-U.S.	29			29			19
	78			21			(57		)
Deferred:
Federal	169			67			59
State	23			1			(5		)
Non-U.S.	(10		)	6			(3		)
	182			74			51
Income tax expense (benefit)	$	260		$	95		$	(6	)

Federal statutory income tax rate to effective income tax rate for continuing operations

	2012	2011	2010
Federal statutory income tax rate	35.0%	35.0%	35.0%
Increase (decrease) in taxes resulting from:
State income taxes	2.2	3.1	(2.7)
Non-U.S. tax rate differential and foreign tax credits	(5.4)	(9.4)	(60.5)
Unrecognized tax benefits and interest	0.2	1.2	17.5
Cash surrender value of life insurance	(0.5)	(1.5)	(5.1)
Nondeductible healthcare claims	—	—	12.7
Change in status of subsidiaries	—	—	12.0
Research credit	—	(2.5)	(5.4)
Valuation allowance on contingent receipts	—	—	(2.0)
Other, net	(0.6)	2.2	(7.9)
Effective rate	30.9%	28.1%	(6.4)%

Unrecognized tax benefits and interest related to unrecognized tax benefits

(In millions)	December 29, 2012			December 31, 2011
Balance at beginning of year	$	294		$	285
Additions for tax positions related to current year	5			8
Additions for tax positions of prior years	2			8
Reductions for tax positions of prior years	(3		)	(7		)
Reductions for expiration of statute of limitations and settlements	(8		)	—
Balance at end of year	$	290		$	294

Deferred tax assets and liabilities

(In millions)	December 29, 2012			December 31, 2011
Deferred tax assets
Obligation for pension and postretirement benefits	$	643		$	635
Accrued expenses*	205			193
Deferred compensation	180			196
Loss carryforwards	81			74
Valuation allowance on finance receivables held for sale	40			130
Allowance for credit losses	39			68
Inventory	30			38
Deferred income	29			52
Other, net	168			172
Total deferred tax assets	1,415			1,558
Valuation allowance for deferred tax assets	(165		)	(189		)
	$	1,250		$	1,369
Deferred tax liabilities
Leasing transactions	$	(217	)	$	(285	)
Property, plant and equipment, principally depreciation	(138		)	(145		)
Amortization of goodwill and other intangibles	(110		)	(111		)
Total deferred tax liabilities	(465		)	(541		)
Net deferred tax asset	$	785		$	828

* Accrued expenses includes warranty and product maintenance reserves, self-insured liabilities, interest and restructuring reserves.

Breakdown between current and long-term net deferred tax assets

(In millions)	December 29, 2012			December 31, 2011
Current	$	256		$	288
Non-current	591			532
	847			820
Finance group’s net deferred tax asset (liability)	(62		)	8
Net deferred tax asset	$	785		$	828

Operating loss and credit carryforward

(In millions)
Non-U.S. net operating loss with no expiration	$	94
Non-U.S. net operating loss expiring through 2032	50
State net operating loss and tax credits, net of tax benefits, expiring through 2032	49
U.S. federal tax credits beginning to expire in 2021	19