Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v2.4.0.6
INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Tax Expense Benefit
The income tax expense (benefit) for the years ended December 31 consists of the following (in millions):
 
2012
 
2011
 
2010
Current:
 
 
 
 
 
U.S. Federal
$
1,901

 
$
1,371

 
$
776

U.S. State and Local
182

 
121

 
119

Non-U.S.
167

 
166

 
161

Total Current
2,250

 
1,658

 
1,056

Deferred:
 
 
 
 
 
U.S. Federal
(1,871
)
 
262

 
828

U.S. State and Local
(201
)
 
44

 
98

Non-U.S.
(11
)
 
8

 
(30
)
Total Deferred
(2,083
)
 
314

 
896

Total
$
167

 
$
1,972

 
$
1,952

Income Before Income Taxes
Income before income taxes includes the following components (in millions):
 
2012
 
2011
 
2010
United States
$
384

 
$
5,309

 
$
4,586

Non-U.S.
590

 
467

 
704

 
$
974

 
$
5,776

 
$
5,290

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:
 
2012
 
2011
 
2010
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

Non-U.S. tax rate differential
(6.1
)
 
(0.4
)
 
(0.7
)
Nondeductible/nontaxable items
(0.4
)
 
(0.1
)
 
0.3

U.S. federal tax credits
(7.4
)
 
(1.7
)
 
(1.9
)
Other
(4.0
)
 
(0.7
)
 
1.8

Effective income tax rate
17.1
 %
 
34.1
 %
 
36.9
 %
Deferred Tax Liabilities and Assets
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
 
2012
 
2011
Property, plant and equipment
$
(3,624
)
 
$
(3,607
)
Goodwill and intangible assets
(1,035
)
 
(951
)
Other
(617
)
 
(554
)
Deferred tax liabilities
(5,276
)
 
(5,112
)
Pension and postretirement benefits
4,608

 
2,106

Loss and credit carryforwards (non-U.S. and state)
258

 
259

Insurance reserves
737

 
696

Vacation pay accrual
209

 
208

Stock compensation
159

 
211

Other
708

 
635

Deferred tax assets
6,679

 
4,115

Deferred tax assets valuation allowance
(220
)
 
(205
)
Deferred tax asset (net of valuation allowance)
6,459

 
3,910

Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)
 
 
 
 
Amounts recognized in the consolidated balance sheets:
 
 
 
Current deferred tax assets
$
583

 
$
611

Current deferred tax liabilities (included in other current liabilities)
(36
)
 
(31
)
Non-current deferred tax assets
684

 
118

Non-current deferred tax liabilities
(48
)
 
(1,900
)
Net deferred tax asset (liability)
$
1,183

 
$
(1,202
)
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):
 
2012
 
2011
U.S. state and local operating loss carryforwards
$
608

 
$
859

U.S. state and local credit carryforwards
$
61

 
$
77

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, 2010
$
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

Additions for tax positions of the current year
13

 
—

 
—

Additions for tax positions of prior years
7

 
9

 
1

Reductions for tax positions of prior years for:
 
 
 
 
 
Changes based on facts and circumstances
(22
)
 
(18
)
 
—

Settlements during the period
(3
)
 
(7
)
 
—

Lapses of applicable statute of limitations
(15
)
 
(4
)
 
—

Balance at December 31, 2012
$
232

 
$
53

 
$
4