INCOME TAXES (Tables)

12 Months Ended

Oct. 31, 2012

INCOME TAXES

Provision for Income Taxes by Taxing Jurisdiction and by Significant Component

The provision for income taxes by taxing jurisdiction and by significant component consisted of the following in millions of dollars:

	2012			2011			2010
Current:
U.S.:
Federal	$	1,277		$	928		$	574
State	119			144			50
Foreign	355			520			363
Total current	1,751			1,592			987
Deferred:
U.S.:
Federal	(76		)	(135		)	156
State	(7		)	(28		)	11
Foreign	(9		)	(5		)	8
Total deferred	(92		)	(168		)	175
Provision for income taxes	$	1,659		$	1,424		$	1,162

Comparison of Statutory and Effective Income Tax Provision

A comparison of the statutory and effective income tax provision and reasons for related differences in millions of dollars follow:

	2012			2011			2010
U. S. federal income tax provision at a statutory rate of 35 percent	$	1,657		$	1,478		$	1,059
Increase (decrease) resulting from:
Valuation allowance on foreign deferred taxes	200			18			5
State and local income taxes, net of federal income tax benefit	73			75			40
Nondeductible health care claims*							123
Nondeductible goodwill impairment charge	6						7
Nontaxable foreign partnership earnings	(172		)
Tax rates on foreign earnings	(69		)	(70		)	(59		)
Research and development tax credits	(10		)	(38		)	(5		)
Wind energy production tax credits							(30		)
Other-net	(26		)	(39		)	22
Provision for income taxes	$	1,659		$	1,424		$	1,162

* Cumulative adjustment from change in law. Effect included in state taxes was $7 million.

Analysis of the Deferred Income Tax Assets and Liabilities

An analysis of the deferred income tax assets and liabilities at October 31 in millions of dollars follows:

	2012					2011
	Deferred			Deferred		Deferred			Deferred
	Tax			Tax		Tax			Tax
	Assets			Liabilities		Assets			Liabilities
Other postretirement benefit liabilities	$	2,136				$	1,944
Tax over book depreciation				$	606				$	492
Accrual for sales allowances	546					438
Pension liabilities - net	457					279
Lease transactions				317					309
Accrual for employee benefits	249					189
Tax loss and tax credit carryforwards	249					121
Share-based compensation	133					113
Inventory	131					152
Goodwill and other intangible assets				110					123
Allowance for credit losses	92					115
Deferred gains on distributed foreign earnings	84					83
Deferred compensation	40					37
Undistributed foreign earnings				11					19
Other items	443			115		348			112
Less valuation allowances	(285		)			(74		)
Deferred income tax assets and liabilities	$	4,275		$	1,159	$	3,745		$	1,055

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the total amounts of unrecognized tax benefits at October 31 in millions of dollars follows:

	2012			2011			2010
Beginning of year balance	$	199		$	218		$	260
Increases to tax positions taken during the current year	46			23			36
Increases to tax positions taken during prior years	54			13			83
Decreases to tax positions taken during prior years	(14		)	(42		)	(133		)
Decreases due to lapse of statute of limitations	(9		)	(13		)	(2		)
Settlements				(1		)	(19		)
Foreign exchange	(11		)	1			(7		)
End of year balance	$	265		$	199		$	218