XML 71 R28.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Tax | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Tax |
20. | INCOME TAX
Income (loss) before income tax is comprised of the following:
|  | Year ended December 31, 2013 |  |  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |
Income (loss) recorded in The Netherlands |  |  | (30 | ) |  |  | (33 | ) |  |  | 54 |
Income (loss) from foreign operations |  |  | (562 | ) |  |  | (2,104 | ) |  |  | 282 |
Income (loss) before income tax benefit (expense) |  |  | (592 | ) |  |  | (2,137 | ) |  |  | 336 |
STMicroelectronics N.V. and its subsidiaries are individually liable for income taxes in their jurisdictions. Tax losses can only offset profits generated by the taxable entity incurring such loss. Income tax benefit (expense) is comprised of the following:
|  | Year ended December 31, 2013 |  |  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |
The Netherlands taxes – current |  |  | 5 |  |  |  | (1 | ) |  |  | (11 | )
Foreign taxes – current |  |  | (90 | ) |  |  | (130 | ) |  |  | (104 | )
Current taxes |  |  | (85 | ) |  |  | (131 | ) |  |  | (115 | )
The Netherlands taxes – deferred |  |  | — |  |  |  | — |  |  |  | (2 | )
Foreign taxes – deferred |  |  | 48 |  |  |  | 80 |  |  |  | (64 | )
Income tax benefit (expense) |  |  | (37 | ) |  |  | (51 | ) |  |  | (181 | )
The principal items comprising the differences in income taxes computed at the Netherlands statutory rate of 25.0% in 2013, 2012 and 2011, and the effective income tax rate are the following:
|  | Year ended December 31, 2013 |  |  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |
Income tax benefit (expense) computed at statutory rate |  |  | 148 |  |  |  | 534 |  |  |  | (84 | )
Non-deductible, non-taxable and other permanent differences, net |  |  | (2 | ) |  |  | (81 | ) |  |  | (2 | )
Income (loss) on equity-method investments |  |  | (31 | ) |  |  | (6 | ) |  |  | (7 | )
Valuation allowance adjustments |  |  | (83 | ) |  |  | (197 | ) |  |  | (130 | )
Current year credits |  |  | 60 |  |  |  | 77 |  |  |  | 94 |
Other tax and credits |  |  | (42 | ) |  |  | (17 | ) |  |  | (32 | )
Benefits from tax holidays |  |  | 18 |  |  |  | 38 |  |  |  | 113 |
Impact of uncertain tax positions |  |  | (33 | ) |  |  | (83 | ) |  |  | (2 | )
Earnings of subsidiaries taxed at different rates |  |  | (72 | ) |  |  | (316 | ) |  |  | (131 | )
Income tax benefit (expense) |  |  | (37 | ) |  |  | (51 | ) |  |  | (181 | )
The valuation allowance adjustments of 2013 include $32 million related to the activities of ST-Ericsson companies until their deconsolidation. In 2013, 2012 and 2011, the line “Earnings of subsidiaries taxed at different rates” includes a decrease of $57 million, $320 million and $131 million, respectively, mainly related to tax rate differences due to tax holidays for countries in a loss position. The tax holidays represent a tax exemption period aimed to attract foreign technological investment in certain tax jurisdictions. The effect of the tax benefits, from tax holidays for countries which are profitable, on basic earnings per share was $0.02, $0.04 and $0.13 for the years ended December 31, 2013, 2012, and 2011, respectively. These agreements are present in various countries and include programs that reduce up to and including 100% of taxes in years affected by the agreements. The Company’s tax holidays expire at various dates through the year ending December 31, 2022. In certain countries, tax holidays can be renewed depending on the Company still meeting certain conditions at the date of expiration of the current tax holidays. Deferred tax assets and liabilities consisted of the following:
|  | December 31, 2013 |  |  | December 31, 2012 |
Tax loss carryforwards and investment credits |  |  | 658 |  |  |  | 820 |
Less unrecognized tax benefit |  |  | (229 | ) |  |  |  |
Tax loss carryforward net of unrecognized tax benefit |  |  | 429 |  |  |  | 820 |
Inventory valuation |  |  | 14 |  |  |  | 24 |
Impairment and restructuring charges |  |  | 63 |  |  |  | 61 |
Fixed asset depreciation in arrears |  |  | 58 |  |  |  | 75 |
Capitalized development costs |  |  | 45 |  |  |  |  |
Receivables for government funding |  |  | 22 |  |  |  | 15 |
Tax credits granted on past capital investments |  |  | 1,131 |  |  |  | 1,114 |
Pension service costs |  |  | 66 |  |  |  | 97 |
Stock awards |  |  | 2 |  |  |  | — |
Commercial accruals |  |  | 10 |  |  |  | 10 |
Other temporary differences |  |  | 70 |  |  |  | 98 |
Total deferred tax assets |  |  | 1,910 |  |  |  | 2,314 |
Valuation allowances |  |  | (1,454 | ) |  |  | (1,634 | )
Deferred tax assets, net |  |  | 456 |  |  |  | 680 |
Accelerated fixed asset depreciation |  |  | (58 | ) |  |  | (64 | )
Acquired intangible assets |  |  | (11 | ) |  |  | (30 | )
Advances of government funding |  |  | (35 | ) |  |  | (26 | )
Other temporary differences |  |  | (13 | ) |  |  | (34 | )
Deferred tax liabilities |  |  | (117 | ) |  |  | (154 | )
Net deferred income tax asset |  |  | 339 |  |  |  | 526 |
At the end of December 2013, the tax loss carryforward and the valuation allowance decreased by $240 and $258 million respectively, mainly due to the deconsolidation of ST-Ericsson companies. For a particular tax-paying component of the Company and within a particular tax jurisdiction, all current deferred tax liabilities and assets are offset and presented as a single amount, similarly to non-current deferred tax liabilities and assets. The Company does not offset deferred tax liabilities and assets attributable to different tax-paying components or to different tax jurisdictions. The net deferred tax assets are recorded in legal entities which have been historically profitable and are expected to be profitable in the next coming years. As of December 31, 2013, the Company and its subsidiaries have gross deferred tax assets on tax loss carryforwards and investment credits that expire starting 2014, as follows:
Year |  |  |
2014 |  |  | 8 |
2015 |  |  | 22 |
2016 |  |  | 19 |
2017 |  |  | 15 |
2018 |  |  | 13 |
Thereafter |  |  | 581 |
Total |  |  | 658 |
The valuation allowance for a particular tax jurisdiction is allocated between current and non-current deferred tax assets for that jurisdiction on a pro rata basis. The “Tax credits granted on past capital investments” mainly related to a 2003 agreement granting the Company certain tax credits for capital investments purchased through the year ending December 31, 2006. Any unused tax credits granted under the agreement will continue to increase yearly by a legal inflationary index (currently 0.56% per annum). The credits may be utilized through 2020 or later depending on the Company meeting certain program criteria. In addition to this agreement, starting in 2007 the Company continues to receive tax credits on the yearly capital investments, which may be used to offset that year’s tax liabilities and increases by the legal inflationary rate. However, pursuant to the inability to utilize these credits currently and in future years, the Company did not recognize any deferred tax asset on such tax allowance. As a result, there is no financial impact to the net deferred tax assets of the Company. The amount of deferred tax benefit (expense) recorded as a component of other comprehensive income (loss) was $(31) million in 2013 and was related primarily to the tax effects of the recognized unfunded status on defined benefits plan. In 2012, it was not material. The cumulative amount of distributable earnings related to the Company’s investments in foreign subsidiaries and corporate joint ventures was $859 million as at December 31, 2013. Due to the Company’s legal and tax structure, with the parent company established in the Netherlands, there was no significant tax impact from the distribution of earnings from investments in foreign subsidiaries and corporate joint ventures. This is because there is no tax impact on dividends paid up to a Dutch holding company. A reconciliation of 2013, 2012 and 2011 beginning and ending amounts of unrecognized tax benefits is as follows:
|  | December 31, 2013 |  |  | December 31, 2012 |  |  | December 31, 2011 |
Balance at beginning of year |  |  | 227 |  |  |  | 148 |  |  |  | 149 |
Additions based on tax positions related to the current year |  |  | 52 |  |  |  | 44 |  |  |  | 36 |
Additions for tax positions of prior years |  |  | 27 |  |  |  | 39 |  |  |  | 19 |
Reduction for tax positions of prior years |  |  | (48 | ) |  |  | — |  |  |  | (3 | )
Reduction for lapse of statute of limitations |  |  |  |  |  |  |  |  |  |  | (50 | )
Reduction due to ST-Ericsson deconsolidation |  |  | (8 | ) |  |  | — |  |  |  | — |
Settlements |  |  | — |  |  |  | (1 | ) |  |  | — |
Prepayment |  |  | (1 | ) |  |  | (6 | ) |  |  |  |
Foreign currency translation |  |  | 6 |  |  |  | 3 |  |  |  | (3 | )
Balance at end of year |  |  | 255 |  |  |  | 227 |  |  |  | 148 |
At December 31, 2013, $229 million of unrecognized tax benefits were classified as a reduction of deferred tax assets. At December 31, 2013, there were no unrecognized tax benefits that if recognized would affect the annual effective tax rate while at December 31, 2012, there were $26 million. It is reasonably possible that certain of the uncertain tax positions disclosed in the table above could increase within the next 12 months due to ongoing tax audits. The Company is not able to make an estimate of the range of the reasonably possible change. Additionally, the Company elected to classify accrued interest and penalties related to uncertain tax positions as components of income tax expense in its consolidated statements of income. Interest and penalties are not material for the years presented or on a cumulative basis. The tax years that remain open for review in the Company’s major tax jurisdictions, including France, Italy, United States and India, are from 1996 to 2013.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration