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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table summarizes the difference between income tax expense at the United States statutory rate of 35% and the income tax expense at effective worldwide tax rates for the respective periods:

Millions of dollars		2014				2013				2012
Earnings before income taxes
United States		$	325			$	149			$	113
Foreign		556				768				445
Earnings before income taxes		881				917				558
Income tax computed at United States statutory rate		308				321				195
U.S. government tax incentives, including Energy Tax Credits		(10		)		(142		)		—
Foreign government tax incentives, including BEFIEX		(46		)		(63		)		(38		)
Foreign tax rate differential		(17		)		(17		)		(2		)
U.S. foreign tax credits		(148		)		(231		)		(31		)
Valuation allowances		9				16				(86		)
State and local taxes, net of federal tax benefit		5				7				2
Foreign withholding taxes		16				29				12
U.S. tax on foreign dividends and subpart F income		56				195				57
Settlement of global tax audits		(5		)		(54		)		18
Other items, net		21				7				6
Income tax computed at effective worldwide tax rates		$	189			$	68			$	133

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes our income tax (benefit) provision for 2014, 2013 and 2012:

		2014								2013								2012
Millions of dollars		Current				Deferred				Current				Deferred				Current				Deferred
United States		$	7			$	8			$	(60	)		$	(57	)		$	18			$	24
Foreign		182				12				187				(9		)		189				(96		)
State and local		(2		)		(18		)		2				5				7				(9		)
		$	187			$	2			$	129			$	(61	)		$	214			$	(81	)
Total income tax expense						$	189							$	68							$	133

Schedule of Deferred Tax Assets and Liabilities

The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2014 and 2013:

Millions of dollars		2014				2013
Deferred tax liabilities
Intangibles		$	800			$	517
Property, net		156				141
LIFO inventory		45				49
Other		193				201
Total deferred tax liabilities		1,194				908
Deferred tax assets
U.S. general business credit carryforwards, including Energy Tax Credits		1,005				1,050
Pensions		316				311
Loss carryforwards		650				467
Inventory prepayment		—				93
Postretirement obligations		199				177
Foreign tax credit carryforwards		249				243
Research and development capitalization		358				239
Employee payroll and benefits		141				138
Accrued expenses		110				102
Product warranty accrual		62				58
Receivable and inventory allowances		73				51
Other		300				233
Total deferred tax assets		3,463				3,162
Valuation allowances for deferred tax assets		(308		)		(186		)
Deferred tax assets, net of valuation allowances		3,155				2,976
Net deferred tax assets		$	1,961			$	2,068

Unrecognized tax benefits

The following table represents a reconciliation of the beginning and ending amount of unrecognized tax benefits that if recognized would impact the effective tax rate, excluding federal benefits of state and local tax positions, and interest and penalties:

Millions of dollars		2014				2013				2012
Balance, January 1		$	113			$	178			$	178
Additions for tax positions of the current year		17				17				13
Additions for tax positions of prior years		4				6				16
Reductions for tax positions of prior years		(23		)		(81		)		(15		)
Settlements during the period		(11		)		(3		)		(5		)
Positions assumed in acquisitions		42				—				—
Lapses of applicable statute of limitation		(1		)		(4		)		(9		)
Balance, December 31		$	141			$	113			$	178

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the change in unrecognized tax benefits, excluding amounts pertaining to examined tax returns.

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