Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes is summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Domestic	$	890	$	927	$	897
Foreign		206		235		263
Income from continuing operations before income taxes	$	1,096	$	1,162	$	1,160

Components of Current and Deferred Portions of Provision for Income Taxes on Continuing Operations

The components of the Company’s current and deferred portions of the provision for income taxes on continuing operations are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Current income tax provision:
Federal	$	185	$	197	$	77
State and local		35		21		26
Foreign		41		44		69
Subtotal		261		262		172
Deferred income tax provision:
Federal		41		93		97
State and local		—		9		15
Foreign		7		10		12
Subtotal		48		112		124
Total provision for income taxes	$	309	$	374	$	296

Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate on Continuing Operations

A reconciliation of the statutory federal income tax rate to the effective income tax rate on continuing operations of the Company is presented in the table below.

	Year Ended December 31,
	2013			2012			2011
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal income tax benefit		2.1			1.7			2.2
Foreign income taxes		(1.6	)		(2.0	)		(2.6	)
Manufacturing benefits		(1.8	)		(1.7	)		(1.6	)
Research and experimentation and other tax credits		(3.4	)		(0.5	)		(1.1	)
Resolution of tax contingencies		(1.0	)		(0.9	)		(7.7	)
Goodwill impairment		—			—			1.2
Other, net		(1.1	)		0.6			0.1
Effective income tax rate on continuing operations		28.2	%		32.2	%		25.5	%

Components of Net Deferred Tax Assets and Liabilities

The significant components of the Company’s net deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013			2012
	(in millions)
Deferred tax assets:
Inventoried costs	$	52		$	33
Compensation and benefits		163			113
Pension and postretirement benefits		207			444
Loss carryforwards		24			20
Tax credit carryforwards		7			9
Other		74			47
Gross deferred tax assets		527			666
Less: valuation allowance		(22	)		(19	)
Net deferred tax assets		505			647
Deferred tax liabilities:
Goodwill and other intangible assets	$	726		$	657
Income recognition on contracts in process		61			72
Property, plant and equipment		85			71
Long-term debt-CODES		81			73
Other		65			7
Gross deferred tax liabilities		1,018			880
Total net deferred tax liabilities	$	(513	)	$	(233	)

Classification of Deferred Tax Assets and Liabilities

The classification of the Company’s deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013			2012
	(in millions)
Current deferred tax assets	$	122		$	95
Non-current deferred tax liabilities		(635	)		(328	)
Total net deferred tax liabilities	$	(513	)	$	(233	)

Reconciliation of Change in Unrecognized Income Tax Benefits, Excluding Interest and Penalties

A reconciliation of the change in unrecognized income tax benefits, excluding potential interest and penalties, is presented in the table below.

	2013			2012			2011
	(in millions)
Balance at January 1	$	130		$	143		$	195
Additions for tax positions related to the current year		16			7			9
Additions for tax positions related to prior years		41			9			33
Reductions for tax positions related to prior years		(8	)		(13	)		(13	)
Reductions for tax positions related to settlements with taxing authorities		—			(1	)		(5	)
Reduction for tax positions related to prior years as a result of a lapse of statute of limitations		(20	)		(15	)		(76	)
Balance at December 31	$	159		$	130		$	143