Income Taxes

The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to pre-tax income as a result of the following items:



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2012			2011			2012			2011
U.S. statutory rate at 35%	$	81		$	86		$	196		$	188
Tax on foreign income	(23		)	(9		)	(55		)	(44		)
Valuation allowance	45			(13		)	48			(1		)
Tax law changes	2			28			2			25
Other items, net	(216		)	(5		)	(219		)	14
Income tax provision	$	(111	)	$	87		$	(28	)	$	182

In the third quarter of 2012, the Company recorded an income tax benefit of $169, net of valuation allowance as described below, primarily related to the recognition of previously unrecognized U.S. foreign tax credits.

In the third quarter, the Company committed to a formal repatriation plan, including certain steps that were completed in September with the filing of its 2011 U.S. income tax return, which will allow it to claim these credits on its 2012 income tax return. The Company's plan involved finalization of earnings and profits in certain foreign subsidiaries, evaluation of expiring US tax law provisions and anticipated utilization of existing net operating loss and foreign tax credit carryforwards. The Company has been utilizing existing net operating losses which will be fully utilized this year and will begin to utilize existing foreign tax credits in 2013. Once the Company claims these credits on its tax return, it has ten years to utilize the credits.

In connection with this action, the Company determined that it will amend its 2003 U.S. income tax return to claim foreign taxes paid as a credit rather than as a tax deduction. The Company recorded a valuation allowance of $47 against certain of these credits that expire in 2013 which, at this time, the Company does not believe are more likely than not to be realized prior to expiration. The Company will continue to search for and evaluate tax planning strategies which may allow it to accelerate taxable income into 2013 in order to use the credits. If the Company is able to identify a feasible tax planning strategy, it is possible that it will release a portion of the valuation allowance in the future.

Realization of the foreign tax credits recognized in the quarter is dependent upon the amount and timing of future taxable income. If actual results are different than the Company's projections, it is possible that the Company may record additional valuation allowance in the future.

The other items caption for the nine months ended September 30, 2011 includes $20 of increase due to tax charges in connection with the relocation of the Company’s European headquarters and management to Switzerland.