Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v2.4.0.6
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2011
Income Tax Expense Benefit

The income tax expense (benefit) for the years ended December 31 consists of the following (in millions):

 

     2011      2010     2009  

Current:

       

U.S. Federal

   $ 1,371       $ 776      $ 715   

U.S. State and Local

     121         119        30   

Non-U.S.

     166         161        147   
  

 

 

    

 

 

   

 

 

 

Total Current

     1,658         1,056        892   

Deferred:

       

U.S. Federal

     262         828        137   

U.S. State and Local

     44         98        21   

Non-U.S.

     8         (30     55   
  

 

 

    

 

 

   

 

 

 

Total Deferred

     314         896        213   
  

 

 

    

 

 

   

 

 

 

Total

   $ 1,972       $ 1,952      $ 1,105   
  

 

 

    

 

 

   

 

 

 
Income Before Income Taxes

Income before income taxes includes the following components (in millions):

 

     2011      2010      2009  

United States

   $ 5,309       $ 4,586       $ 2,750   

Non-U.S.

     467         704         323   
  

 

 

    

 

 

    

 

 

 
   $ 5,776       $ 5,290       $ 3,073   
  

 

 

    

 

 

    

 

 

 
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31 consists of the following:

 

         2011             2010             2009      

Statutory U.S. federal income tax rate

     35.0     35.0     35.0

U.S. state and local income taxes (net of federal benefit)

     2.0        2.4        1.2   

Non-U.S. tax rate differential

     (0.4     (0.7     (1.6

Nondeductible/nontaxable items

     (0.1     0.3        1.0   

U.S. federal tax credits

     (1.7     (1.9     (3.5

Other

     (0.7     1.8        3.9   
  

 

 

   

 

 

   

 

 

 

Effective income tax rate

     34.1     36.9     36.0
  

 

 

   

 

 

   

 

 

 
Deferred Tax Liabilities and Assets

Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):

 

     2011     2010  

Property, plant and equipment

   $ 3,607      $ 3,335   

Goodwill and intangible assets

     951        853   

Other

     554        562   
  

 

 

   

 

 

 

Gross deferred tax liabilities

     5,112        4,750   
  

 

 

   

 

 

 

Pension and postretirement benefits

     2,106        1,864   

Loss and credit carryforwards (non-U.S. and state)

     259        295   

Insurance reserves

     696        655   

Vacation pay accrual

     208        191   

Stock compensation

     211        242   

Other

     635        568   
  

 

 

   

 

 

 

Gross deferred tax assets

     4,115        3,815   

Deferred tax assets valuation allowance

     (205     (207
  

 

 

   

 

 

 

Net deferred tax asset

     3,910        3,608   
  

 

 

   

 

 

 

Net deferred tax liability

   $ 1,202      $ 1,142   
  

 

 

   

 

 

 

Amounts recognized in the consolidated balance sheets:

    

Current deferred tax assets

   $ 611      $ 659   
  

 

 

   

 

 

 

Current deferred tax liabilities (included in other current liabilities)

   $ 31      $ 28   
  

 

 

   

 

 

 

Non-current deferred tax assets (included in other non-current assets)

   $ 118      $ 97   
  

 

 

   

 

 

 

Non-current deferred tax liabilities

   $ 1,900      $ 1,870   
  

 

 

   

 

 

 
U.S. State and Local Operating Loss and Credit Carryforwards

We have U.S. state and local operating loss and credit carryforwards as follows (in millions):

 

     2011      2010  

U.S. state and local operating loss carryforwards

   $ 859       $ 1,088   

U.S. state and local credit carryforwards

   $ 77       $ 74
Summarized Activity Related to Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (in millions):

 

     Tax     Interest     Penalties  

Balance at January 1, 2009

   $ 388      $ 97      $ 10   

Additions for tax positions of the current year

     41        —          —     

Additions for tax positions of prior years

     76        27        2   

Reductions for tax positions of prior years for:

      

Changes based on facts and circumstances

     (214     (34     (3

Settlements during the period

     (23     (4     —     

Lapses of applicable statute of limitations

     (2     —          (1
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2009

     266        86        8   
  

 

 

   

 

 

   

 

 

 

Additions for tax positions of the current year

     16        —          —     

Additions for tax positions of prior years

     45        25        2   

Reductions for tax positions of prior years for:

      

Changes based on facts and circumstances

     (27     (10     (3

Settlements during the period

     (6     (3     —     

Lapses of applicable statute of limitations

     (10     (3     —     
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2010

     284        95        7   
  

 

 

   

 

 

   

 

 

 

Additions for tax positions of the current year

     13        —          —     

Additions for tax positions of prior years

     17        6        —     

Reductions for tax positions of prior years for:

      

Changes based on facts and circumstances

     (50     (9     (2

Settlements during the period

     (11     (19     (1

Lapses of applicable statute of limitations

     (1     —          (1
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2011

   $ 252      $ 73      $ 3