Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Components of the (provision)/benefit for income taxes on continuing operations

	Year Ended December 31
Millions of dollars	2011			2010			2009
Current income taxes:
Federal	$	(1,026	)	$	(400	)	$	30
Foreign		(334	)		(287	)		(250	)
State		(109	)		(42	)		(24	)
Total current		(1,469	)		(729	)		(244	)
Deferred income taxes:
Federal		(28	)		(124	)		(237	)
Foreign		57			3			(31	)
State		1			(3	)		(6	)
Total deferred		30			(124	)		(274	)
Provision for income taxes	$	(1,439	)	$	(853	)	$	(518	)

United States and foreign components of income from continuing operations before income taxes

	Year Ended December 31
Millions of dollars	2011		2010		2009
United States	$	4,040	$	1,918	$	589
Foreign		409		737		1,093
Total	$	4,449	$	2,655	$	1,682

Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying the US statutory rate to income from continuing operations before income taxes

	Year Ended December 31
	2011			2010			2009
United States statutory rate		35.0	%		35.0	%		35.0	%
Domestic manufacturing deduction		(2.1	)		(1.8	)		-
Adjustments of prior year taxes		(1.3	)		(1.2	)		(2.1	)
Impact of foreign income taxed at different rates		(0.5	)		(1.3	)		(3.3	)
Other impact of foreign operations		(0.4	)		(1.3	)		(0.4	)
Impact of devaluation of Venezuelan Bol�var Fuerte		-			0.8			-
Other items, net		1.6			1.9			1.6
Total effective tax rate on continuing operations		32.3	%		32.1	%		30.8	%

Primary components of deferred tax assets and liabilities

	December 31
Millions of dollars	2011		2010
Gross deferred tax assets:
Employee compensation and benefits	$	345	$	313
Net operating loss carryforwards		139		52
Accrued liabilities		64		77
Insurance accruals		48		47
Software revenue recognition		44		50
Inventory		30		28
Capitalized research and experimentation		29		44
Other		110		106
Total gross deferred tax assets		809		717
Gross deferred tax liabilities:
Depreciation and amortization		648		631
Joint ventures, partnerships, and unconsolidated affiliates		38		48
Other		68		57
Total gross deferred tax liabilities		754		736
Valuation allowances - net operating loss carryforwards		44		22
Net deferred income tax asset (liability)	$	11	$	(41	)

Rollforward of unrecognized tax benefits and associated interest and penalties

		Unrecognized		Interest
Millions of dollars		Tax Benefits		and Penalties
Balance at January 1, 2009	$	300	$	43
Change in prior year tax positions		(42)		(6)
Change in current year tax positions		23		2
Cash settlements with taxing authorities		(7)		(1)
Lapse of statute of limitations		(11)		(9)
Balance at December 31, 2009	$	263	$	29
Change in prior year tax positions		(74)		7
Change in current year tax positions		19		2
Cash settlements with taxing authorities		(28)		(5)
Lapse of statute of limitations		(3)		(1)
Balance at December 31, 2010	$	177(a)	$	32
Change in prior year tax positions		38		41
Change in current year tax positions		5		1
Cash settlements with taxing authorities		(12)		(3)
Lapse of statute of limitations		(3)		(2)
Balance at December 31, 2011	$	205(a)(b)	$	69

(a)

Includes $67 million as of December 31, 2011 and $62 million as of December 31, 2010 in amounts to be settled in accordance with our Tax Sharing Agreement with KBR and foreign unrecognized tax benefits that would give rise to a United States tax credit. See Note 7 for further information. The remaining balance of $138 million as of December 31, 2011 and $115 million as of December 31, 2010, if resolved in our favor, would positively impact the effective tax rate and, therefore, be recognized as additional tax benefits in our statement of operations.

(b)

Includes $42 million that could be resolved within the next 12 months.