Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Earnings (Loss) from Continuing Operations Before Tax by Jurisdiction

Earnings (loss) from continuing operations before tax by jurisdiction are as follows:



	Year Ended December 31,
	2012	2011	2010
	As Adjusted (Note 2)
	(In $ millions)
US	195	60	131
International ⁽¹⁾	126	407	302
Total	321	467	433

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⁽¹⁾	Includes aggregate earnings generated by operations in Bermuda, Luxembourg, the Netherlands and Hong Kong of $320 million, $317 million and $257 million for the years ended December 31, 2012, 2011 and 2010, respectively, which have an aggregate effective income tax rate of 5.6%, 4.0% and 4.8% for each year, respectively.

Schedule of Income Tax Provision (Benefit)

The income tax provision (benefit) consists of the following:



	Year Ended December 31,
	2012		2011		2010
	As Adjusted (Note 2)
	(In $ millions)
Current
US	41		24		62
International	76		32		34
Total	117		56		96
Deferred
US	(66	)	(11	)	(15	)
International	(106	)	(4	)	(9	)
Total	(172	)	(15	)	(24	)
Total	(55	)	41		72

Schedule of Effective Tax Rate Reconciliation

A reconciliation of the significant differences between the US federal statutory tax rate of 35% and the effective income tax rate on income from continuing operations is as follows:



	Year Ended December 31,
	2012		2011		2010
	As Adjusted (Note 2)
	(In $ millions, except percentages)
Income tax provision computed at US federal statutory tax rate	112		163		152
Change in valuation allowance	29		7		38
Equity income and dividends	(31	)	(25	)	(41	)
(Income) expense not resulting in tax impact, net	(39	)	(16	)	8
US tax effect of foreign earnings and dividends	42		48		28
Foreign tax credits	(187	)	(66	)	(33	)
Other foreign tax rate differentials	(2	)	(58	)	(10	)
Legislative changes	—		—		(71	)	⁽¹⁾
Tax-deductible interest on foreign equity investments and other related items	11		(3	)	(3	)
State income taxes, net of federal benefit	4		4		3
Other, net	6		(13	)	1
Income tax provision (benefit)	(55	)	41		72

Effective income tax rate	(17)	%	9	%	17	%

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⁽¹⁾	Represents the impact of Miscellaneous Tax Resolutions issued by the Mexican tax authority to clarify various provisions included in the 2010 Mexican Tax Reform Bill.

Schedule of Consolidated Deferred Tax Assets and Liabilities

Significant components of the consolidated deferred tax assets and liabilities are as follows:



	As of December 31,
	2012		2011
	(In $ millions)
Deferred Tax Assets
Pension and postretirement obligations	579		529
Accrued expenses	58		57
Inventory	—		1
Net operating loss	398		359
Tax credit carryforwards	206		94
Other	370		159
Subtotal	1,611		1,199
Valuation allowance ⁽¹⁾	(399	)	(363	)
Total	1,212		836
Deferred Tax Liabilities
Depreciation and amortization	479		319
Investments in affiliates	83		50
Other	70		51
Total	632		420
Net deferred tax assets (liabilities)	580		416

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⁽¹⁾	Includes deferred tax asset valuation allowances primarily for the Company's deferred tax assets in the US, Luxembourg, France, Spain, China, the United Kingdom and Germany, as well as other foreign jurisdictions. These valuation allowances relate primarily to net operating loss carryforward benefits and other net deferred tax assets, all of which may not be realizable

Schedule of Activity Related to Uncertain Tax Positions

Activity related to uncertain tax positions is as follows:



	Year Ended December 31,
	2012		2011		2010
	(In $ millions)
As of the beginning of the year	211		244		208
Increases in tax positions for the current year	6		—		—
Increases in tax positions for prior years	42		37		85
Decreases in tax positions for prior years	(19	)	(54	)	(48	)
Decreases due to settlements	(33	)	(16	)	(1	)
As of the end of the year	207		211		244

Total uncertain tax positions that if recognized would impact the effective tax rate	237		230		264
Total amount of interest and penalties recognized in the consolidated statements of operations	6		(1	)	11
Total amount of interest and penalties recognized in the consolidated balance sheets	61		55		56

- Definition

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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