Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Data from Continuing Operations

Income tax data from our continuing operations is as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Pretax income
U.S.	$	356		$	165		$	85
Foreign		262			260			250
	$	618		$	425		$	335
Provision (benefit) for income tax
Current:
U.S. federal	$	26		$	(215	)	$	(61	)
State and local		22			(21	)		18
Foreign		118			88			43
		166			(148	)		-
Deferred:
U.S. federal		(25	)		62			22
State and local		(2	)		(11	)		(7	)
Foreign		9			22			12
		(18	)		73			27
	$	148		$	(75	)	$	27

Composition of Net Deferred Tax Balances

Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The composition of net deferred tax balances were as follows (in millions):

	December 31,
	2012			2011
Current deferred tax assets	$	320		$	278
Long-term deferred tax assets		636			639
Current deferred tax liabilities (1)		(40	)		(7	)
Long-term deferred tax liabilities		(78	)		(46	)
Deferred income taxes	$	838		$	864

(1) Included in the accrued taxes and other line item in the consolidated balance sheets.

Deferred Tax Assets (Liabilities)

The tax effect of the temporary differences and carryforward items that give rise to deferred taxes were as follows (in millions):

	December 31,
	2012			2011
Plant, property and equipment	$	(43	)	$	(23	)
Intangibles		(70	)		(11	)
Inventories		58			118
Deferred gains		366			350
Investments		208			133
Receivables (net of reserves)		47			9
Accrued expenses and other reserves		182			201
Employee benefits		81			61
Net operating loss, capital loss and tax credit carryforwards		223			257
Other		37			3
		1,089			1,098
Less valuation allowance		(251	)		(234	)
Deferred income taxes	$	838		$	864

Reconciliation of Tax Provision

A reconciliation of our tax provision at the U.S. statutory rate to the provision for income tax as reported is as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Tax provision at U.S. statutory rate	$	216		$	149		$	117
U.S. state and local income taxes		6			(19	)		(2	)
Tax on repatriation of foreign earnings		3			25			(19	)
Effect of foreign operations and other		(74	)		(94	)		(108	)
Foreign withholding tax		34			22			16
Tax/(benefit) on capital gains		(1	)		334			99
Change in asset basis		(13	)		(130	)		—
Change in uncertain tax positions		15			22			23
Tax settlements		(1	)		(25	)		(42	)
Tax/(benefit) on asset dispositions		(41	)		(51	)		4
Change in valuation allowances		21			(304	)		(99	)
Other		(17	)		(4	)		38
Provision for income tax (benefit)	$	148		$	(75	)	$	27

Reconciliation of Beginning and Ending Balance of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Beginning of year	$	153		$	510		$	999
Additions based on tax positions related to the current year		19			24			29
Additions for tax positions of prior years		27			36			18
Settlements with tax authorities		(4	)		(407	)		(499	)
Reductions for tax positions in prior years		(3	)		(6	)		(5	)
Reductions due to the lapse of applicable statutes of limitations		(1	)		(4	)		(32	)
End of year	$	191		$	153		$	510