Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

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,
	2013	2012	2011
	(In $ millions)
US	806	195	60
International ⁽¹⁾	803	126	407
Total	1,609	321	467

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⁽¹⁾	Includes aggregate earnings generated by operations in Bermuda, Luxembourg, the Netherlands and Hong Kong of $275 million, $320 million and $317 million for the years ended December 31, 2013, 2012 and 2011, respectively, which have an aggregate effective income tax rate of 4.0%, 5.6% and 4.0% for each year, respectively.

Schedule of Income Tax Provision (Benefit)

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



	Year Ended December 31,
	2013	2012		2011
	(In $ millions)
Current
US	78	41		24
International	83	76		32
Total	161	117		56
Deferred
US	194	(66	)	(11	)
International	153	(106	)	(4	)
Total	347	(172	)	(15	)
Total	508	(55	)	41

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,
	2013		2012		2011
	(In $ millions, except percentages)
Income tax provision computed at US federal statutory tax rate	563		112		163
Change in valuation allowance	89		29		7
Equity income and dividends	(44	)	(31	)	(25	)
(Income) expense not resulting in tax impact, net	(33	)	(39	)	(16	)
US tax effect of foreign earnings and dividends	35		42		48
Foreign tax credits	(38	)	(187	)	(66	)
Other foreign tax rate differentials	(55	)	(2	)	(58	)
Legislative changes	(19	)	—		—
Tax-deductible interest on foreign equity investments and other related items	11		11		(3	)
State income taxes, net of federal benefit	11		4		4
Other, net	(12	)	6		(13	)
Income tax provision (benefit)	508		(55	)	41

Effective income tax rate	32	%	(17)	%	9	%

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,
	2013		2012
	(In $ millions)
Deferred Tax Assets
Pension and postretirement obligations	374		579
Accrued expenses	139		58
Inventory	10		—
Net operating loss	563		398
Tax credit carryforwards	94		206
Other	165		370
Subtotal	1,345		1,611
Valuation allowance ⁽¹⁾	(461	)	(399	)
Total	884		1,212
Deferred Tax Liabilities
Depreciation and amortization	479		479
Investments in affiliates	142		83
Other	94		70
Total	715		632
Net deferred tax assets (liabilities)	169		580

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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, Singapore, 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,
	2013		2012		2011
	(In $ millions)
As of the beginning of the year	207		211		244
Increases in tax positions for the current year	17		6		—
Increases in tax positions for prior years	57		42		37
Decreases in tax positions for prior years	(32	)	(19	)	(54	)
Decreases due to settlements	(2	)	(33	)	(16	)
As of the end of the year	247		207		211

Total uncertain tax positions that if recognized would impact the effective tax rate	258		237		230
Total amount of interest expense (benefit) and penalties recognized in the consolidated statements of operations	4		6		(1	)
Total amount of interest expense and penalties recognized in the consolidated balance sheets	65		61		55

- 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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