Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income tax expense

Federal and foreign income tax expense consisted of the following:

	Year Ended December 31
$ in millions	2012		2011		2010
Income Taxes on Continuing Operations
Currently payable
Federal income taxes		$912		$592		$394
Foreign income taxes	15		18		11
Total federal and foreign income taxes currently payable	927		610		405
Change in deferred federal and foreign income taxes	60		387		57
Total federal and foreign income taxes		$987		$997		$462

Income tax reconciliation

Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times the earnings from continuing operations before income taxes due to the following:

	Year Ended December 31
$ in millions	2012			2011			2010
Income tax expense on continuing operations at statutory rate		$1,038			$1,079			$ 828
Manufacturing deduction	(42		)	(32		)	(33		)
Research tax credit	—			(17		)	(12		)
Tax settlements and adjustments to uncertain tax position accruals	—			—			(298		)
Other, net	(9		)	(33		)	(23		)
Total federal and foreign income taxes		$ 987			$ 997			$ 462

Unrecognized tax benefit rollforward

The change in unrecognized tax benefits during 2012, 2011, and 2010, excluding interest, is as follows:

	December 31
$ in millions	2012			2011			2010
Unrecognized tax benefits at beginning of the year		$118			$126			$429
Additions based on tax positions related to the current year	12			11			19
Additions for tax positions of prior years	28			31			4
Reductions for tax positions of prior years	(1		)	(22		)	—
Settlements	(1		)	(28		)	(326		)
Net change in unrecognized tax benefits	38			(8		)	(303		)
Unrecognized tax benefits at end of the year		$156			$118			$126

Components of deferred tax assets and liabilities

The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:

	December 31
$ in millions	2012			2011
Deferred Tax Assets
Retirement benefits		$2,710			$1,819
Provisions for accrued liabilities	675			649
Stock-based compensation	146			130
Other	151			147
Gross deferred tax assets	3,682			2,745
Less valuation allowance	(52		)	(50		)
Net deferred tax assets	3,630			2,695
Deferred Tax Liabilities
Goodwill	804			716
Property, plant, and equipment, net	376			277
Contract accounting differences	199			218
Other	135			88
Gross deferred tax liabilities	1,514			1,299
Total net deferred tax assets		$2,116			$1,396