Income Taxes (Tables)

6 Months Ended

Dec. 31, 2012

Components Of Earnings Before Income Taxes by Geographic Region




	Six Months Ended				Year Ended
(In millions)	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)

United States	$	611	$	592	$	1,035	$	2,035	$	1,453
Foreign		386		189		730		980		1,132
	$	997	$	781	$	1,765	$	3,015	$	2,585

Significant Components Of Income Taxes




	Six Months Ended				Year Ended
(In millions)	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)
Current
Federal	$	92	$	179	$	300	$	251	$	422
State		9		19		21		10		18
Foreign		83		7		118		222		195

Deferred
Federal		92		14		66		483		107
State		20		3		9		43		(4)
Foreign		7		15		9		(12)		(72)
	$	303	$	237	$	523	$	997	$	666

Significant Components Of Deferred Tax Liabilities And Assets


	December 31		June 30		June 30
	2012		2012		2011
	(In millions)
Deferred tax liabilities
Property, plant, and equipment	$	1,163	$	1,085	$	1,016
Equity in earnings of affiliates		329		334		255
Debt exchange		140		58		-
Inventories		89		81		324
Other		141		92		104
	$	1,862	$	1,650	$	1,699

Deferred tax assets
Pension and postretirement benefits	$	373	$	487	$	307
Stock compensation		67		63		58
Foreign tax credit carryforwards		32		31		46
Foreign tax loss carryforwards		344		241		220
Capital loss carryforwards		25		-		-
State tax attributes		79		67		57
Other		105		126		129
Gross deferred tax assets		1,025		1,015		817
Valuation allowances		(173)		(145)		(95)
Net deferred tax assets	$	852	$	870	$	722

Net deferred tax liabilities	$	1,010	$	780	$	977
The net deferred tax liabilities are classified as follows:
Current assets	$	36	$	-	$	-
Current assets (foreign)		-		-		57
Current liabilities		-		(6)		(175)
Current liabilities (foreign)		(97)		(54)		-
Noncurrent assets (foreign)		318		281		106
Noncurrent liabilities		(1,267)		(1,001)		(965)
	$	(1,010)	$	(780)	$	(977)

Reconciliation Of The Statutory Federal Income Tax Rate To The Company's Effective Tax Rate On Earnings



	Six Months Ended				Year Ended
	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)

Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%	35.0	%
State income taxes, net of
federal tax benefit	2.4		2.4		1.4		1.1		0.3
Foreign earnings taxed at rates
other than the U.S. statutory rate	(7.6)		(7.2)		(4.8)		(5.0)		(8.4)
Foreign currency remeasurement	2.6		(0.3)		(3.3)		0.9		(0.7)
Income tax adjustment to filed returns	(1.5)		(0.7)		0.9		(0.2)		-
Other	(0.5)		1.1		0.4		1.3		(0.4)
Effective income tax rate	30.4	%	30.3	%	29.6	%	33.1	%	25.8	%

Unrecognized Tax Benefits



	Unrecognized Tax Benefits
	December 31, 2012		June 30, 2012		June 30, 2011
	(In millions)

Beginning balance	$	80	$	79	$	84
Additions related to current year’s tax positions		-		-		4
Additions related to prior years’ tax positions		6		26		-
Reductions related to prior years’ tax positions		(1)		(21)		(7)
Reductions due to lapse of statute of limitations		(1)		-		-
Settlements with tax authorities		(7)		(4)		(2)
Ending balance	$	77	$	80	$	79

- 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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