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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) attributable to continuing operations —
| 2014 |  | 2013 |  | 2012
Current |  |  |  |  |  |  |  |
U.S. federal and state | $ | (5 | ) |  | $ | 23 |  |  | $ | 18 |
Non-U.S. | 134 |  |  | 106 |  |  | 113 |
Total current | 129 |  |  | 129 |  |  | 131 |
Deferred |  |  |  |  |  |  |  |
U.S. federal and state | (177 | ) |  | (1 | ) |  |  |
Non-U.S. | (22 | ) |  | (9 | ) |  | (80 | )
Total deferred | (199 | ) |  | (10 | ) |  | (80 | )
Total expense (benefit) | $ | (70 | ) |  | $ | 119 |  |  | $ | 51 |
We record interest and penalties related to uncertain tax positions as a component of income tax expense or benefit. Net interest expense for the periods presented herein is not significant. Income from continuing operations before income taxes —
| 2014 |  | 2013 |  | 2012
U.S. operations | $ | 175 |  |  | $ | 151 |  |  | $ | 77 |
Non-U.S. operations | 85 |  |  | 217 |  |  | 287 |
Income before income taxes | $ | 260 |  |  | $ | 368 |  |  | $ | 364 |
Income tax audits — We conduct business globally and, as a result, file income tax returns in multiple jurisdictions that are subject to examination by taxing authorities throughout the world. With few exceptions, we are no longer subject to U.S. federal, state and local or foreign income tax examinations for years before 2009. The U.S. federal income tax audits for 2011 and 2012 are expected to conclude in the first quarter of 2015, resulting in no incremental cash taxes. We are currently under audit by U.S. and foreign authorities for certain taxation years. When the issues related to these periods are settled, the total amounts of unrecognized tax benefits for all open tax years may be modified. We accrued tax reserves of $2 in 2014, $6 in 2013 and $4 in 2012 for an uncertain tax position in Italy. Audit outcomes and the timing of the audit settlements are subject to uncertainty and we cannot make an estimate of the impact on our financial position at this time. Effective tax rate reconciliation for continuing operations —
| 2014 |  | 2013 |  | 2012
U.S. federal income tax rate | 35 | % |  | 35 | % |  | 35 | %
Adjustments resulting from: |  |  |  |  |  |  |  |
State and local income taxes, net of federal benefit | 1 |  |  |  |  |  |  |
Non-U.S. income | (6 | ) |  | (4 | ) |  | (4 | )
Non-U.S. tax incentives | (4 | ) |  | (4 | ) |  | (5 | )
Non-U.S. withholding taxes on undistributed earnings of non-U.S. operations | 4 |  |  | 5 |  |  | 4 |
Settlement and return adjustments | 3 |  |  | 1 |  |  | 2 |
Miscellaneous items |  |  |  | 1 |  |  | (1 | )
Valuation allowance adjustments | (60 | ) |  | (2 | ) |  | (17 | )
Effective income tax rate for operations | (27 | )% |  | 32 | % |  | 14 | %
The income tax rate varies from the U.S. federal statutory rate of 35% due to establishment, release and adjustment of valuation allowances in several countries, nondeductible expenses, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings to the U.S. In 2014, income tax expense in the U.S. was reduced by $179 for release of valuation allowances for income forecasted to be realized in 2015 in connection with certain tax planning actions expected to be completed in 2015. No tax benefit has been recognized on a charge of $80 in 2014 relating to the divestiture of our Venezuela operations due to the existence of a valuation allowance, resulting in an increase in the effective tax rate. Valuation allowance releases of $34 in Canada and $20 in the U.K. favorably impacted the 2012 effective rate. In 2013, income tax expense was reduced by $7 for the impact of new tax legislation and tax rate changes outside the U.S. Additionally, non-U.S. income in each of the three years contributed to an effective tax rate of less than 35% due to lower statutory tax rates in the countries where we operate outside the U.S. Foreign income repatriation — We provide for U.S. federal income and non-U.S. withholding taxes on the earnings of our non-U.S. operations that are not considered to be permanently reinvested. Accordingly, we continue to analyze and adjust the estimated tax impact of the income and non-U.S. withholding liabilities based on the amount and source of these earnings. We recognized net expense of $3, $8 and $7 for 2014, 2013 and 2012 related to future income taxes and non-U.S. withholding taxes on repatriations from operations that are not permanently reinvested. We also accrued withholding taxes of $7, $13 and $10 during 2014, 2013 and 2012 related to the actual transfer of funds to the U.S. and between foreign subsidiaries. The earnings of our non-U.S. subsidiaries will likely be repatriated to the U.S. in the form of repayments of intercompany borrowings and distributions from earnings. Certain of our international operations had intercompany loan obligations to the U.S. totaling $574 at the end of 2014. Included in this amount are intercompany loans and related interest accruals with an equivalent value of $36 which are denominated in a foreign currency and considered to be permanently invested. Valuation allowance adjustments — We have generally not recognized tax benefits on losses generated in several entities, including in the U.S., where the recent history of operating losses does not allow us to satisfy the “more likely than not” criterion for the recognition of deferred tax assets. Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as valuation allowances are adjusted to offset the associated tax expense or benefit. At December 31, 2014, we continue to carry a valuation allowance against certain deferred tax assets in the U.S. because, on a more likely than not basis, we have concluded that a significant portion of the U.S. deferred tax assets are not expected to be realized. When evaluating the continued need for this valuation allowance we consider all components of comprehensive income, and we weight the positive and negative evidence, putting greater reliance on objectively verifiable historical evidence than projections of future profitability that are dependent on actions that have not taken place as of the assessment date. We also consider the pro forma effects on historical profitability of actions that have occurred through the year of assessment and objectively verifiable effects of material forecasted events that have a sustained effect on future profitability, as well as the effect on historical profits of nonrecurring events. These effects included items such as the lost future interest income resulting from the prepayment on and subsequent sale of the payment-in-kind callable note receivable and the additional interest expense resulting from the $750 senior unsecured notes payable issued in July 2013. We also consider the pro forma historical and prospective effects of tax planning strategies expected to be implemented. Our 2014 assessment considered the effects of certain tax planning actions which will be completed in 2015. A sustained return to profitability, after giving pro forma effect to implemented actions, planned actions and nonrecurring events, along with positive expectations for future profitability are necessary for a determination that a valuation allowance should be released. In 2015, we expect to generate taxable income associated with certain tax planning actions. The gain and related income associated with these actions are estimated to generate tax of $179. Although the actual gain and operating income may differ from the current estimate, we concluded that they were objectively verifiable and reasonably estimated. While our U.S. operations have experienced improved profitability in recent years, our analysis of the income of the U.S. operations, as adjusted for pro forma effects of developments through 2014 and planned future actions, demonstrates historical losses as of December 31, 2014 with an uncertain forecast of near break-even results. Therefore, we have not achieved a level of sustained profitability that would, in our judgment, support a release of valuation allowance at December 31, 2014 beyond the $179 relating to the income previously noted. While there may be opportunity for our U.S. operations to generate profits in the future, our near-term level of profitability is uncertain. The potential long-term profitability cannot be given as much weight in our analysis given the objectively verifiable lack of sustained pro forma historical profitability and uncertainty associated with the future U.S. operations. To the extent that our operations in the U.S., after giving effect to the planned aforementioned tax actions, are profitable in 2015 and our projections of profitability beyond 2015 are sufficiently positive based upon objective and verifiable assumptions, it is reasonably possible that we could release up to $500 of the remaining valuation allowance against our U.S. deferred tax assets in the next twelve months. During 2012, improvements in our operating results in Canada and the U.K., provided sufficient positive evidence to reduce the valuation allowances in those jurisdictions, resulting in tax benefits of $34 and $20. Deferred tax assets and liabilities — Temporary differences and carryforwards give rise to the following deferred tax assets and liabilities.
| 2014 |  | 2013
Net operating loss carryforwards | $ | 654 |  |  | $ | 788 |
Postretirement benefits, including pensions | 148 |  |  | 123 |
Research and development costs | 110 |  |  | 104 |
Expense accruals | 57 |  |  | 62 |
Other tax credits recoverable | 60 |  |  | 56 |
Capital loss carryforwards | 55 |  |  | 65 |
Inventory reserves | 18 |  |  | 17 |
Postemployment and other benefits | 4 |  |  | 4 |
Other | 25 |  |  | 28 |
Total | 1,131 |  |  | 1,247 |
Valuation allowance | (728 | ) |  | (982 | )
Deferred tax assets | 403 |  |  | 265 |
Unremitted earnings | (31 | ) |  | (86 | )
Intangibles | (41 | ) |  | (52 | )
Depreciation | (39 | ) |  | (39 | )
Other | (58 | ) |  | (59 | )
Deferred tax liabilities | (169 | ) |  | (236 | )
Net deferred tax assets | $ | 234 |  |  | $ | 29 |
Carryforwards — Our deferred tax assets include benefits expected from the utilization of net operating loss (NOL), capital loss and credit carryforwards in the future. The following table identifies the net operating loss deferred tax asset components and the related allowances that existed at December 31, 2014. Due to time limitations on the ability to realize the benefit of the carryforwards, additional portions of these deferred tax assets may become unrealizable in the future.
| Deferred Tax Asset |  | Valuation Allowance |  | Carryforward Period |  | Earliest Year of Expiration
Net operating losses |  |  |  |  |  |  |  |  |
U.S. federal | $ | 432 |  |  | $ | (261 | ) |  | 20 |  | 2028
U.S. state | 122 |  |  | (114 | ) |  | Various |  | 2015
Brazil | 26 |  |  | (14 | ) |  | Unlimited |  |
France | 13 |  |  |  |  |  | Unlimited |  |
Australia | 33 |  |  | (33 | ) |  | Unlimited |  |
U.K. | 8 |  |  | (4 | ) |  | Unlimited |  |
Argentina | 17 |  |  | (17 | ) |  | 5 |  | 2015
Other | 3 |  |  | (3 | ) |  | Unlimited |  |
Total | $ | 654 |  |  | $ | (446 | ) |  |  |  |
In addition to the NOL carryforwards listed in the table above, we have deferred tax assets related to capital loss carryforwards of $55 which are fully offset with valuation allowances at December 31, 2014. We also have deferred tax assets of $60 related to other credit carryforwards which are offset with $57 of valuation allowances at December 31, 2014. The capital losses can be carried forward indefinitely while the other credits are generally available for 10 to 20 years with portions currently expiring. We also have a deferred tax asset of $31 related to NOLs for excess tax benefits generated upon the settlement of stock awards that increased a current year net operating loss. We cannot record the benefit of these losses in the financial statements until the losses are utilized to reduce our income taxes payable at which time we will recognize the tax benefit in equity. The use of a portion of our $1,235 U.S. federal NOL as of December 31, 2014 is subject to limitation due to the change in ownership of our stock upon emergence from bankruptcy. Generally, the application of the relevant Internal Revenue Code (IRC) provisions will release the limitation on $84 of pre-change NOLs each year, allowing pre-change losses to offset post-change taxable income. Through further evaluation and audit adjustment, and after considering U.S. taxable income in 2014, we estimate that $677 of our U.S. federal NOLs remains subject to limitation as of December 31, 2014. The remainder of our U.S. federal NOLs represents a combination of post-change NOLs and pre-change NOLs on which the limitation has been released. However, there can be no assurance that trading in our shares will not effect another change in ownership under the IRC which would further limit our ability to utilize our available NOLs. Unrecognized tax benefits — Unrecognized tax benefits are the difference between a tax position taken, or expected to be taken, in a tax return and the benefit recognized for accounting purposes. Interest income or expense, as well as penalties relating to income tax audit adjustments and settlements, are recognized as components of income tax expense or benefit. Interest of $6 and $5 was accrued on the uncertain tax positions as of December 31, 2014 and 2013. Reconciliation of gross unrecognized tax benefits —
| 2014 |  | 2013 |  | 2012
Balance, beginning of period | $ | 101 |  |  | $ | 108 |  |  | $ | 46 |
Decrease related to expiration of statute of limitations | (3 | ) |  | (7 | ) |  | (9 | )
Increase (decrease) related to prior years tax positions |  |  |  | (6 | ) |  | 63 |
Increases related to current year tax positions | 25 |  |  | 6 |  |  | 8 |
Decrease related to settlements | (14 | ) |  |  |  |  |  |
Balance, end of period | $ | 109 |  |  | $ | 101 |  |  | $ | 108 |
We anticipate that our gross unrecognized tax benefits will decrease by $13 in the next twelve months upon the expected completion of examinations in various jurisdictions. The settlement of these matters will not impact the effective tax rate. Gross unrecognized tax benefits of $61 would impact the effective tax rate if recognized. If other open matters are settled with the IRS or other taxing jurisdictions, the total amounts of unrecognized tax benefits for open tax years may be modified.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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