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Income Tax (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income (Loss) before Income Tax

Income (loss) before income tax is comprised of the following:

		Year ended December 31, 2015				Year ended December 31, 2014				Year ended December 31, 2013
Income (loss) recorded in The Netherlands			(18	)			(9	)			(30	)
Income (loss) from foreign operations			107				115				(562	)
Income (loss) before income tax benefit (expense)			89				106				(592	)

Income Tax Benefit (Expense)

Income tax benefit (expense) is comprised of the following:

		Year ended December 31, 2015				Year ended December 31, 2014				Year ended December 31, 2013
The Netherlands Taxes – current			5				—				5
Foreign taxes – current			(43	)			(50	)			(54	)
Total current taxes			(38	)			(50	)			(49	)
The Netherlands Taxes – deferred			—				—				—
Foreign taxes – deferred			59				73				12
Total deferred taxes			59				73				12
Income tax benefit (expense)			21				23				(37	)
Effective tax rate			-24	%			-21	%			-6	%

Differences in Income Taxes Computed at Netherlands Statutory Rate and Effective Income Tax Rate

The principal items comprising the differences in income taxes computed at the Netherlands statutory rate of 25.0% in 2015, 2014 and 2013, and the effective income tax rate are the following:

		Year ended December 31, 2015				Year ended December 31, 2014				Year ended December 31, 2013
Income tax benefit (expense) computed at statutory rate			(23	)			(26	)			148
Non-deductible and non-taxable permanent differences, net			(18	)			8				(2	)
Income (loss) on equity-method investments			—				(11	)			(31	)
Valuation allowance adjustments			1				26				(83	)
Current year credits			44				53				60
Other tax and credits			(13	)			8				(42	)
Benefits from tax holidays			42				65				18
Net impact of changes to uncertain tax positions			8				(92	)			(33	)
Earnings of subsidiaries taxed at different rates			(20	)			(8	)			(72	)
Income tax benefit (expense)			21				23				(37	)

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consisted of the following:

		December 31, 2015				December 31, 2014
Tax loss carryforwards and investment credits			827				908
Less unrecognized tax benefit			(180	)			(238	)
Tax loss carryforward net of unrecognized tax benefit			647				670
Inventory valuation			22				15
Impairment and restructuring charges			15				16
Fixed asset depreciation in arrears			44				39
Capitalized development costs			80				63
Receivables for government funding			5				13
Tax credits granted on past capital investments			1,156				1,147
Pension service costs			73				82
Stock awards			—				5
Commercial accruals			21				15
Other temporary differences			86				78
Total deferred tax assets			2,149				2,143
Valuation allowances			(1,585	)			(1,607	)
Deferred tax assets, net			564				536
Accelerated fixed asset depreciation			(16	)			(26	)
Acquired intangible assets			(11	)			(11	)
Advances of government funding			(16	)			(23	)
Other temporary differences			(8	)			(3	)
Deferred tax liabilities			(51	)			(63	)
Net deferred income tax asset			513				473

Gross Deferred Tax Assets on Tax Loss Carryforwards and Investment Credits Expiration

As of December 31, 2015, the Company and its subsidiaries have gross deferred tax assets on tax loss carryforwards and investment credits that expire starting 2016, as follows:

Year
2016			24
2017			12
2018			89
2019			79
2020			17
Thereafter			606
Total			827

Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

A reconciliation of 2015, 2014 and 2013 beginning and ending amounts of unrecognized tax benefits is as follows:

		December 31, 2015				December 31, 2014				December 31, 2013
Balance at beginning of year			313				255				227
Additions based on tax positions related to the current year			38				51				52
Additions for tax positions of prior years			—				43				27
Reduction for tax positions of prior years			(48	)			(2	)			(48	)
Reduction due to ST-Ericsson deconsolidation			—								(8	)
Settlements			(48	)							—
Prepayment			(3	)			(5	)			(1	)
Reductions due to lapse of statute of limitations			(1	)			—				—
Foreign currency translation			(25	)			(29	)			6
Balance at end of year			226				313				255

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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.

+ 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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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
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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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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h)(1)(i))
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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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