Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

v2.4.0.8
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Income before income taxes
 
 
Years ended December 31,
In millions
 
2013
 
2012
 
2011
Income before income taxes
 
 
 
 
 
 
U.S. income
 
$
1,058

 
$
998

 
$
881

Foreign income
 
1,061

 
1,273

 
1,790

Total
 
$
2,119

 
$
2,271

 
$
2,671

Income tax expense
Income tax expense consists of the following:
 
 
Years ended December 31,
In millions
 
2013
 
2012
 
2011
Current
 
 
 
 
 
 
U.S. federal and state
 
$
239

 
$
118

 
$
116

Foreign
 
192

 
299

 
524

Total current
 
431

 
417

 
640

Deferred
 
 
 
 
 
 
U.S. federal and state
 
67

 
108

 
69

Foreign
 
33

 
8

 
16

Total deferred
 
100

 
116

 
85

Income tax expense
 
$
531

 
$
533

 
$
725

Reconciliation of the U.S. federal income tax rate to the actual effective tax rate
A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows:
 
 
Years ended December 31,
 
 
2013
 
2012
 
2011
Statutory U.S. federal income tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
State income tax, net of federal effect
 
0.2

 
1.0

 
0.4

Research tax credits
 
(3.7
)
 
(0.4
)
 
(4.7
)
Differences in rates and taxability of foreign subsidiaries and joint ventures
 
(6.0
)
 
(12.1
)
 
(4.6
)
Other, net
 
(0.4
)
 

 
1.0

Effective tax rate
 
25.1
 %
 
23.5
 %
 
27.1
 %
Net deferred tax assets
Carryforward tax benefits and the tax effect of temporary differences between financial and tax reporting that give rise to net deferred tax assets were as follows:
 
 
December 31,
In millions
 
2013
 
2012
Deferred tax assets
 
 
 
 
U.S. federal and state carryforward benefits
 
$
124

 
$
115

Foreign carryforward benefits
 
63

 
50

Employee benefit plans
 
328

 
369

Warranty and marketing expenses
 
332

 
308

Accrued expenses
 
70

 
75

Other
 
51

 
78

Gross deferred tax assets
 
968

 
995

Valuation allowance
 
(101
)
 
(95
)
Total deferred tax assets
 
867

 
900

Deferred tax liabilities
 
 
 
 
Property, plant and equipment
 
(304
)
 
(218
)
Unremitted income of foreign subsidiaries and joint ventures
 
(201
)
 
(213
)
Employee benefit plans
 
(158
)
 
(47
)
Other
 
(27
)
 
(26
)
Total deferred tax liabilities
 
(690
)
 
(504
)
Net deferred tax assets
 
$
177

 
$
396

Reconciliation of the beginning and ending amount of unrecognized tax benefits
A reconciliation of unrecognized tax benefits was as follows:
In millions
 
 
Balance at December 31, 2010
 
$
85

Additions based on tax positions related to the current year
 
5

Additions based on tax positions related to the prior years
 
44

Reductions for tax positions related to prior years
 
(3
)
Reductions for tax positions relating to settlements with taxing authorities
 
(39
)
Reductions for tax positions relating to lapse of statute of limitations
 
(6
)
Balance at December 31, 2011
 
86

Additions based on tax positions related to the current year
 
4

Additions based on tax positions related to the prior years
 
57

Reductions for tax positions related to prior years
 
(2
)
Balance at December 31, 2012
 
145

Additions based on tax positions related to the current year
 
10

Additions based on tax positions related to the prior years
 
21

Reductions for tax positions related to prior years
 
(6
)
Reductions for tax positions relating to lapse of statute of limitations
 
(1
)
Balance at December 31, 2013
 
$
169