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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Before Income Taxes

For the years ended December 31, income before income taxes consisted of the following:

In millions		2013				2012				2011
Income before income taxes
United States		$	362			$	388			$	309
Foreign			146				190				172
Total income before income taxes		$	508			$	578			$	481

Income Tax Expense

For the years ended December 31, income tax expense consisted of the following:

In millions		2013				2012				2011
Income tax expense
Current
Federal		$	78			$	50			$	26
State and local			10				9				3
Foreign			26				23				29
Deferred
Federal			18				72				64
State and local			2				7				8
Foreign			(3	)			(2	)			(2	)
Total income tax expense		$	131			$	159			$	128

The Difference Between the Effective Tax Rate and the U.S. Federal Statutory Income Tax Rate

The following table presents the principal components of the difference between the effective tax rate and the U.S. federal statutory income tax rate for the years ended December 31:

In millions		2013				2012				2011
Income tax expense at the U.S. federal tax rate			35.0	%			35.0	%			35.0	%
Foreign income tax differential			(7.3	%)			(8.1	%)			(7.4	%)
State and local income taxes			0.4	%			0.7	%			1.3	%
U.S. permanent book/tax differences			(1.6	%)			(0.5	%)			(1.8	%)
Other, net			(0.7	%)			0.4	%			(0.5	%)
Total income tax expense			25.8	%			27.5	%			26.6	%

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities included in the balance sheets at December 31 were as follows:

In millions		2013				2012
Deferred income tax assets
Employee pensions and other liabilities		$	57			$	54
Other balance sheet reserves and allowances			22				27
Deferred revenue			2				4
Tax loss and credit carryforwards			41				41
Capitalized research and development			5				16
Other			1				0
Total deferred income tax assets			128				142
Valuation allowance			(13	)			(9	)
Net deferred income tax assets			115				133
Deferred income tax liabilities
Intangibles and capitalized software			117				123
Property and equipment			29				26
Other			0				5
Total deferred income tax liabilities			146				154
Total net deferred income tax liabilities		($	31	)		($	21	)

Liability Related to Uncertain Tax Positions

Below is a rollforward of the Company’s liability related to uncertain tax positions at December 31:

In millions		2013				2012
Balance at January 1		$	31			$	28
Gross increases for prior period tax positions			1				0
Gross decreases for prior period tax positions			(3	)			(1	)
Gross increases for current period tax positions			5				4
Balance at December 31		$	34			$	31

X

- Definition

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.

+ References

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

-Paragraph 9

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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 income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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