Alcoa 2012 Annual Report Download - page 146
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T. Income Taxes
The components of income from continuing operations before income taxes were as follows:
2012 2011 2010
U.S. $394 $ (98) $(403)
Foreign (70) 1,161 951
$324 $1,063 $ 548
The provision for income taxes on income from continuing operations consisted of the following:
2012 2011 2010
Current:
Federal* $ 85 $ 10 $ 33
Foreign 167 427 409
State and local 9 (1) (7)
261 436 435
Deferred:
Federal* 129 28 37
Foreign (227) (211) (320)
State and local (1) 2 (4)
(99) (181) (287)
Total $ 162 $ 255 $ 148
* Includes U.S. taxes related to foreign income
Included in discontinued operations is a tax benefit of $1 in 2011 and $3 in 2010.
The exercise of employee stock options generated a tax charge of $1 in 2012 and a tax benefit of $6 in 2011 and $2 in
2010, representing only the difference between compensation expense recognized for financial reporting and tax purposes.
These amounts decreased or increased equity and increased or reduced current taxes payable in their respective periods.
Alcoa has unamortized tax-deductible goodwill of $97 resulting from intercompany stock sales and reorganizations.
Alcoa recognizes the tax benefits (generally at a 30% to 34% rate) associated with this tax-deductible goodwill as it is
being amortized for local income tax purposes rather than in the period in which the transaction is consummated.
A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate for continuing operations was as follows:
2012 2011 2010
U.S. federal statutory rate 35.0% 35.0% 35.0%
Taxes on foreign operations (0.1) (11.0) (5.4)
Permanent differences on restructuring charges and asset disposals 10.8 - 0.7
Audit and other adjustments to prior years’ accruals 3.5 (1.1) 1.2
Noncontrolling interests 3.8 0.8 2.6
Statutory tax rate and law changes (0.4) 0.8 (5.1)
Tax law change related to Medicare Part D - - 14.4
Changes in valuation allowances 15.2 2.3 (8.7)
Amortization of goodwill related to intercompany stock sales/reorganizations (7.7) (2.8) (5.2)
Change in legal structure of investment (4.1) - -
Interest income related to income tax positions (1.3) (0.2) -
Company-owned life insurance/split-dollar net premiums (3.9) (0.2) (1.8)
Other (0.8) 0.4 (0.8)
Effective tax rate 50.0% 24.0% 26.9%
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