Income taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income taxes

Components of profit (loss) before taxes

	Years ended December 31,
(Millions of dollars)	2011		2010		2009
U.S.	$	2,250	$	778	$	(648	)
Non-U.S.	4,475		2,972		1,217
	$	6,725	$	3,750	$	569

Components of the provision (benefit) for income taxes

	Years ended December 31,
(Millions of dollars)	2011			2010			2009
Current tax provision (benefit):
U.S.	$	750		$	247		$	(443	)
Non-U.S.	1,014			645			350
State (U.S.)	72			44			(13		)
	1,836			936			(106		)
Deferred tax provision (benefit):
U.S.	2			103			1
Non-U.S.	(92		)	(75		)	(149		)
State (U.S.)	(26		)	4			(16		)
	(116		)	32			(164		)
Total Provision (benefit) for income taxes	$	1,720		$	968		$	(270	)

Reconciliation of the U.S. federal statutory rate to effective rate

	Years ended December 31,
(Millions of dollars)	2011					2010					2009
Taxes at U.S. statutory rate	$	2,354		35.0	%	$	1,313		35.0	%	$	199		35.0	%
(Decreases) increases in taxes resulting from:
Non-U.S. subsidiaries taxed at other than 35%	(467		)	(6.9	)%	(339		)	(9.0	)%	(261		)	(46.0	)%
State and local taxes, net of federal	30			0.4	%	27			0.7	%	(19		)	(3.3	)%
Interest and penalties, net of tax	25			0.4	%	16			0.4	%	20			3.5	%
U.S. research and production incentives	(152		)	(2.3	)%	(74		)	(2.0	)%	(47		)	(8.2	)%
Other—net	(7		)	(0.1	)%	(5		)	(0.1	)%	(29		)	(5.1	)%
	1,783			26.5	%	938			25.0	%	(137		)	(24.1	)%
Tax law change related to Medicare subsidies	—			—		90			2.4	%	—			—
Prior year tax and interest adjustments	41			0.6	%	(34		)	(0.9	)%	(133		)	(23.4	)%
Divestiture of non-deductible goodwill	33			0.5	%	—			—		—			—
Release of valuation allowances	(24		)	(0.3	)%	(26		)	(0.7	)%	—			—
Non-U.S. earnings reinvestment changes	(113		)	(1.7	)%	—			—		—			—
Provision (benefit) for income taxes	$	1,720		25.6	%	$	968		25.8	%	$	(270	)	(47.5	)%

Deferred income tax assets and liabilities

	December 31,
(Millions of dollars)	2011		2010		2009
Assets:
Deferred and refundable income taxes	$	1,384	$	824	$	802
Noncurrent deferred and refundable income taxes	2,157		2,493		2,704
	3,541		3,317		3,506
Liabilities:
Other current liabilities	69		7		11
Other liabilities	559		141		138
Deferred income taxes—net	$	2,913	$	3,169	$	3,357

	December 31,
(Millions of dollars)	2011			2010			2009
Deferred income tax assets:
Pension	$	2,130		$	1,065		$	1,207
Postemployment benefits other than pensions	1,622			1,501			1,362
Tax carryforwards	821			1,117			1,185
Unrealized profit excluded from inventories	372			269			229
Warranty reserves	338			253			243
Stock based compensation	232			215			182
Post sale discounts	141			142			112
Allowance for credit losses	131			111			102
Deferred compensation	102			106			95
Other—net	645			394			396
	6,534			5,173			5,113
Deferred income tax liabilities:
Capital and intangible assets	(2,743		)	(1,423		)	(1,185		)
Undistributed profits of non-U.S. subs	(215		)	—			—
Translation	(193		)	(169		)	(96		)
	(3,151		)	(1,592		)	(1,281		)
Valuation allowance for deferred tax assets	(470		)	(412		)	(475		)
Deferred income taxes—net	$	2,913		$	3,169		$	3,357

Summary of net operating loss carryforwards

(Millions of dollars)

2012		2013		2014		2015		2016-2032		Unlimited		Total
$	4	$	6	$	16	$	40	$	256	$	1,015	$	1,337

Reconciliation of unrecognized tax benefits

	Years ended December 31,
(Millions of dollars)	2011			2010			2009
Balance at January 1,	$	789		$	761		$	803
Additions for tax positions related to current year	118			21			37
Additions for tax positions related to prior years	108			59			43
Reductions for tax positions related to prior years	(30		)	(49		)	(45		)
Reductions for settlements 2	—			—			(61		)
Reductions for expiration of statute of limitations	(27		)	(3		)	(16		)
Balance at December 31,	$	958		$	789		$	761
Amount that, if recognized, would impact the effective tax rate	$	835		$	667		$	593

1           Foreign currency translation amounts are included within each line as applicable.

2           Includes cash payment or other reduction of assets to settle liability.