v2.4.0.6

Provision for Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2012
Components of Income (Loss) Before Income Taxes | The components of income (loss) before income taxes are as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Netherlands |  |  | (93 | ) |  |  | (27 | ) |  |  | (490 | )
Foreign |  |  | 68 |  |  |  | 127 |  |  |  | 135 |
|  |  | (25 | ) |  |  | 100 |  |  |  | (355 | )
Components of Provision for Income Taxes | The components of the provision for income taxes are as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Current taxes: |  |  |  |  |  |  |  |  |  |  |  |
Netherlands |  |  | (1 | ) |  |  | (3 | ) |  |  | (12 | )
Foreign |  |  | (20 | ) |  |  | (29 | ) |  |  | (40 | )
|  |  | (21 | ) |  |  | (32 | ) |  |  | (52 | )
Deferred taxes: |  |  |  |  |  |  |  |  |  |  |  |
Netherlands |  |  | 5 |  |  |  | (10 | ) |  |  | 3 |
Foreign |  |  | 15 |  |  |  | 21 |  |  |  | 25 |
|  |  | 20 |  |  |  | 11 |  |  |  | 28 |
Total provision for income taxes |  |  | (1 | ) |  |  | (21 | ) |  |  | (24 | )
Reconciliation of Statutory Income Tax Rate | A reconciliation of the statutory income tax rate in the Netherlands as a percentage of income (loss) before income taxes and the effective income tax rate is as follows:
(in percentages) |  | 2012 |  |  | 2011 |  |  | 2010 |
Statutory income tax in the Netherlands |  |  | 25.0 |  |  |  | 25.0 |  |  |  | 25.5 |
Increase (reduction) in rate resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Rate differential local statutory rates versus statutory rate of the Netherlands |  |  | 64.0 |  |  |  | (15.7 | ) |  |  | 1.6 |
Net change in valuation allowance |  |  | (178.0 | ) |  |  | 12.7 |  |  |  | (16.7 | )
Prior year adjustments |  |  | 5.2 |  |  |  | (2.0 | ) |  |  | (1.6 | )
Non-taxable income |  |  | 41.6 |  |  |  | (10.8 | ) |  |  | 0.7 |
Non-tax-deductible expenses/losses |  |  | (69.6 | ) |  |  | 19.6 |  |  |  | (12.3 | )
Other taxes and tax rate changes |  |  | 18.2 |  |  |  | (1.0 | ) |  |  | 0.1 |
Withholding taxes |  |  | (7.6 | ) |  |  | 6.9 |  |  |  | (4.1 | )
Unrecognized tax benefits |  |  | (24.8 | ) |  |  | (1.0 | ) |  |  | (2.5 | )
Tax incentives |  |  | 122.0 |  |  |  | (12.7 | ) |  |  | 2.5 |
Effective tax rate |  |  | (4.0 | )% |  |  | 21.0 | % |  |  | (6.8 | )%
Principal Components of Deferred Tax Assets and Liabilities | The principal components of deferred tax assets and liabilities are presented below:
|  | 2012 |  |  | 2011 |
|  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Intangible assets |  |  | 13 |  |  |  | (200 | ) |  |  | 22 |  |  |  | (245 | )
Property, plant and equipment |  |  | 20 |  |  |  | (33 | ) |  |  | 25 |  |  |  | (28 | )
Inventories |  |  | 2 |  |  |  | — |  |  |  | 1 |  |  |  | — |
Receivables |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | (13 | )
Other assets |  |  | 3 |  |  |  | (5 | ) |  |  | — |  |  |  | (4 | )
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pensions |  |  | 42 |  |  |  | (1 | ) |  |  | 27 |  |  |  | (2 | )
Restructuring |  |  | 46 |  |  |  | — |  |  |  | 23 |  |  |  | — |
Other |  |  | 21 |  |  |  | — |  |  |  | 27 |  |  |  | (1 | )
Long-term debt |  |  | 1 |  |  |  | (7 | ) |  |  | — |  |  |  | (22 | )
Undistributed earnings of foreign subsidiaries |  |  | — |  |  |  | (27 | ) |  |  | — |  |  |  | (27 | )
Tax loss carryforwards (including tax credit carryforwards) |  |  | 659 |  |  |  | — |  |  |  | 694 |  |  |  | — |
Total gross deferred tax assets (liabilities) |  |  | 808 |  |  |  | (273 | ) |  |  | 819 |  |  |  | (342 | )
Net deferred tax position |  |  | 535 |  |  |  |  |  |  |  | 477 |  |  |  |  |
Valuation allowances |  |  | (589 | ) |  |  |  |  |  |  | (545 | ) |  |  |  |
Net deferred tax assets (liabilities) |  |  | (54 | ) |  |  |  |  |  |  | (68 | ) |  |  |  |
Expiration of Tax Loss Carryforwards | At December 31, 2012 tax loss carryforwards of $2,515 million will expire as follows:
|  | Balance December 31, 2012 |  |  | Scheduled expiration |
|  |  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | 2017 |  |  | 2018-2022 |  |  | later |  |  | unlimited |
Tax loss carryforwards |  |  | 2,515 |  |  |  | 1 |  |  |  | 5 |  |  |  | 191 |  |  |  | 748 |  |  |  | 525 |  |  |  | 159 |  |  |  | 156 |  |  |  | 730 |
Expiration of Tax Credit Carryforwards | The Company also has tax credit carryforwards of $92 million, which are available to offset future tax, if any, and which will expire as follows:
|  | Balance December 31, 2012 |  |  | Scheduled expiration |
|  |  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | 2017 |  |  | 2018-2022 |  |  | later |  |  | unlimited |
Tax credit carryforwards |  |  | 92 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 82 |
Classification of Deferred Tax Assets and Liabilities in Consolidated Balance Sheets | The classification of the deferred tax assets and liabilities in the Company’s consolidated balance sheets is as follows:
|  | 2012 |  |  | 2011 |
Deferred tax assets within current assets |  |  | 12 |  |  |  | 5 |
Deferred tax assets within other non-current assets |  |  | 22 |  |  |  | 19 |
Deferred tax liabilities within accrued liabilities |  |  | (4 | ) |  |  | (1 | )
Deferred tax liabilities within other non-current liabilities |  |  | (84 | ) |  |  | (91 | )
|  |  | (54 | ) |  |  | (68 | )
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Balance as of January 1, |  |  | 169 |  |  |  | 195 |  |  |  | 52 |
Increases from tax positions taken during prior periods |  |  | 16 |  |  |  | — |  |  |  | 10 |
Decreases from tax positions taken during prior periods |  |  | (25 | ) |  |  | (12 | ) |  |  | (7 | )
Increases from tax positions taken during current period |  |  | 2 |  |  |  | 10 |  |  |  | 140 |
Decreases relating to settlements with the tax authorities |  |  | (23 | ) |  |  | (24 | ) |  |  | — |
Balance as of December 31, |  |  | 139 |  |  |  | 169 |  |  |  | 195 |

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- 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 Reference 1: 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 + Details
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