Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision relating to continuing operations consists of the following: 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
(millions)
Current	$	37		$	110		$	138		$	145
Deferred	74			98			174			152
Total Income Tax Provision	$	111		$	208		$	312		$	297
Effective Tax Rate	40		%	30		%	31		%	29		%

Our effective tax rate for the first nine months of 2012 increased as compared with the first nine months of 2011. This increase is primarily due to the establishment of a valuation allowance of $32 million with respect to foreign tax credits available, resulting in a corresponding increase in income tax expense. During the third quarter of 2012, we increased our reserve for uncertain tax positions related to prior years by $10 million, for a total year to date reserve of $23 million.

During the first nine months of 2011, we increased the valuation allowance against our deferred tax asset for foreign tax credits by $16 million resulting in a corresponding increase in income tax expense.

In our major tax jurisdictions, the earliest years remaining open to examination are as follows: US – 2008, Equatorial Guinea – 2007, Israel – 2008, UK – 2010, the Netherlands – 2009, and China – 2006.

See Note 3. Acquisitions and Divestitures for income taxes related to discontinued operations.