Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Domestic and Foreign Components of Income Before Income Taxes

The domestic and foreign components of income before income taxes were as follows (in millions):


	Years Ended December 31,
	2012		2011		2010
Domestic	$	1,812	$	1,282	$	727
Foreign		1,693		1,640		1,670

	$	3,505	$	2,922	$	2,397

Components of Provision for Income Taxes

The components of the provision for income taxes consisted of (in millions):


	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	700		$	484		$	421
State		48			37			34
Foreign		371			768			448

Total current income tax provision		1,119			1,289			903

Deferred:
Federal		(151	)		(28	)		(260	)
State		—			(3	)		(8	)
Foreign		54			(321	)		103

Total deferred income tax provision		(97	)		(352	)		(165	)

Total income tax provision	$	1,022		$	937		$	738

Difference Between Effective Tax Rate

The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows (in millions):


	Years Ended December 31,
	2012			2011			2010
Federal income tax at U.S. statutory rate	$	1,227		$	1,023		$	839
Foreign income tax rate differential		(154	)		(152	)		(117	)
State income tax, net of federal benefit		31			22			17
Nondeductible expenses		30			42			40
Tax benefit of manufacturing deduction		(29	)		(37	)		(19	)
Foreign dividends, net of foreign tax credits		(115	)		9			15
Change in deferred tax valuation allowance		80			(18	)		—
Other		(48	)		48			(37	)

Total income tax provision	$	1,022		$	937		$	738

Components of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities were as follows (in millions):


	December 31,
	2012			2011			2010
Deferred tax assets:
Allowances and operating liabilities	$	368		$	331		$	344
Net operating loss carryforwards		25			14			10
Postretirement benefits		54			14			17
Foreign tax credit carryforwards		259			106			220
Other		149			151			75

		855			616			666
Valuation allowance for deferred tax assets		(93	)		(13	)		(9	)

Total deferred tax assets		762			603			657

Deferred tax liabilities:
Tax over book depreciation		268			204			213
Intangible assets		1,448			1,398			1,307
Deferred income		314			226			456
Accrued U.S. tax on unremitted earnings		92			70			149
Other		208			168			211

Total deferred tax liabilities		2,330			2,066			2,336

Net deferred tax liability	$	1,568		$	1,463		$	1,679

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

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


	2012			2011			2010
Unrecognized tax benefit at beginning of year	$	131		$	118		$	58
Additions based on tax positions related to the current year		2			9			1
Additions for tax positions of prior years		—			13			82
Reductions for tax positions of prior years		—			—			(5	)
Reductions for lapse of applicable statutes of limitations		(5	)		(9	)		(18	)

Unrecognized tax benefit at end of year	$	128		$	131		$	118