v2.4.0.6
INCOME TAXES (Tables)
 12 Months Ended
Dec. 31, 2012
Components of Income Tax Expense (Benefit)

The components of the provision for income taxes, net are as follows (in millions):

 

     Year Ended December 31,  
     2012     2011     2010  

Current taxes:

       

U.S. and state

    $ 562      $ 103      $ 311   

International

      131        52        37   
  

 

 

    

 

 

    

 

 

  

Current taxes

      693        155        348   

Deferred taxes:

       

U.S. and state

      (156 )      157        1   

International

      (109 )      (21 )      3   
  

 

 

    

 

 

    

 

 

  

Deferred taxes

      (265 )      136        4   
  

 

 

    

 

 

    

 

 

  

Provision for income taxes, net

    $ 428      $ 291      $ 352   
  

 

 

    

 

 

    

 

 

  
Income before Income Tax, Domestic and Foreign

U.S. and international components of income before income taxes are as follows (in millions):

 

     Year Ended December 31,  
     2012     2011      2010  

U.S.

    $ 882      $ 658       $ 886   

International

      (338 )      276         611   
  

 

 

    

 

 

     

 

 

  

Income before income taxes

    $ 544      $ 934       $ 1,497   
  

 

 

    

 

 

     

 

 

  
Effective Income Tax Rate Reconciliation

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows:

 

     Year Ended December 31,  
     2012     2011     2010  

Federal statutory rate

      35.0 %      35.0 %      35.0 % 

Effect of:

       

Impact of foreign tax differential

      31.5        (8.4 )      (12.7 ) 

State taxes, net of federal benefits

      0.2        1.5        1.5   

Tax credits

      (4.4 )      (3.2 )      (1.1 ) 

Nondeductible stock-based compensation

      11.1        4.1        1.6   

Other, net

      5.2        2.2        (0.8 ) 
  

 

 

    

 

 

    

 

 

  

Total

      78.6 %      31.2 %      23.5 % 
  

 

 

    

 

 

    

 

 

  
Deferred Tax Assets and Liabilities

Deferred income tax assets and liabilities are as follows (in millions):

 

     Year Ended
December  31,		  
     2012     2011  

Deferred tax assets:

     

Net operating losses U.S. - Federal/States (1)

    $ 47      $ 43   

Net operating losses foreign (2)

      289        113   

Accrued liabilities, reserves, & other expenses

      482        412   

Stock-based compensation

      281        178   

Deferred revenue

      129        41   

Assets held for investment

      129        64   

Other items

      133        98   

Tax credits (3)

      12        7   
  

 

 

    

 

 

  

Total gross deferred tax assets

      1,502        956   

Less valuation allowance (4)

      (415 )      (227 ) 
  

 

 

    

 

 

  

Deferred tax assets, net of valuation allowance

      1,087        729   

Deferred tax liabilities:

     

Depreciation & amortization

      (698 )      (572 ) 

Acquisition related intangible assets

      (274 )      (231 ) 

Other items

      (29 )      (21 ) 
  

 

 

    

 

 

  

Net deferred tax assets (liabilities), net of valuation allowance

    $ 86      $ (95 ) 
  

 

 

    

 

 

  

 

(1) Excluding $9 million and $116 million of deferred tax assets at December 31, 2012 and 2011, related to net operating losses that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.
(2) Excluding $2 million and $13 million of deferred tax assets at December 31, 2012 and 2011, related to net operating losses that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.
(3) Excluding $146 million and $278 million of deferred tax assets at December 31, 2012 and 2011, related to tax credits that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.
(4) Relates primarily to deferred tax assets that would only be realizable upon the generation of future capital gains and net income in certain foreign taxing jurisdictions.
Summary of Income Tax Contingencies

The reconciliation of our tax contingencies is as follows (in millions):

 

     December 31,  
     2012     2011     2010  

Gross tax contingencies – January 1

    $ 229      $ 213      $ 181   

Gross increases to tax positions in prior periods

      91        22        31   

Gross decreases to tax positions in prior periods

      (47 )      (3 )      (1 ) 

Gross increases to current period tax positions

      26        4        5   

Audit settlements paid

      (4 )      (1 )      (3 ) 

Lapse of statute of limitations

      (1 )      (6 )      —     
  

 

 

    

 

 

    

 

 

  

Gross tax contingencies – December 31 (1)

    $ 294      $ 229      $ 213   
  

 

 

    

 

 

    

 

 

  

 

(1) As of December 31, 2012, we had $294 million of tax contingencies all of which, if fully recognized, would decrease our effective tax rate.