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	$	858	$	892	$	895
Foreign		197		230		267
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162

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	$	181	$	198	$	78
State and local		34		21		26
Foreign		38		44		69
Subtotal		253		263		173
Deferred income tax provision:
Federal		35		80		95
State and local		—		8		15
Foreign		7		9		13
Subtotal		42		97		123
Total provision for income taxes	$	295	$	360	$	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	2.3
Foreign income taxes		(1.6)		(2.0)	(2.6)
Manufacturing benefits		(1.9)		(1.8)	(1.5)
Research and experimentation and other tax credits		(3.6)		(0.5)	(1.1)
Resolution of tax contingencies		(1.0)		(0.9)	(7.7)
Goodwill impairment		—		—	1.2
Other, net		(1.0)		0.6	(0.1)
Effective income tax rate on continuing operations		28.0%		32.1%	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	$	72	$	33
Compensation and benefits		164		114
Pension and postretirement benefits		207		444
Loss carryforwards		24		20
Tax credit carryforwards		7		9
Other		75		48
Gross deferred tax assets		549		668
Less: valuation allowance		(22)		(19)
Net deferred tax assets		527		649
Deferred tax liabilities:
Goodwill and other intangible assets	$	726	$	657
Income recognition on contracts in process		58		56
Property, plant and equipment		85		71
Long-term debt-CODES		81		73
Other		65		7
Gross deferred tax liabilities		1,015		864
Total net deferred tax liabilities	$	(488)	$	(215)

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	$	147	$	113
Non-current deferred tax liabilities		(635)		(328)
Total net deferred tax liabilities	$	(488)	$	(215)

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	$	138	$	150	$	201
Additions for tax positions related to the current year		18		8		10
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	$	169	$	138	$	150