Baker Hughes 2014 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2014 Baker Hughes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

Baker Hughes Incorporated
Notes to Consolidated Financial Statements
65
NOTE 6. INCOME TAXES
The provision for income taxes is comprised of the following for the years ended December 31:
2014 2013 2012
Current:
U.S. $ 365 $ 159 $ 251
Foreign 601 452 528
Total current 966 611 779
Deferred:
U.S. (52) (54) (57)
Foreign (18) 55 (57)
Total deferred (70) 1 (114)
Provision for income taxes $ 896 $ 612 $ 665
The geographic sources of income before income taxes are as follows for the years ended December 31:
2014 2013 2012
U.S. $ 920 $ 512 $ 700
Foreign 1,707 1,203 1,282
Income before income taxes $2,627 $1,715 $1,982
The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate
to income before income taxes for the reasons set forth below for the years ended December 31:
2014 2013 2012
U.S. statutory income tax rate 35.0% 35.0% 35.0%
Effect of foreign operations (5.3) (8.7) (2.0)
Change in valuation allowances related to foreign losses 4.0 8.9 0.9
Adjustments of prior years’ tax positions 1.2 0.9 (2.9)
State income taxes - net of U.S. tax benefit 0.9 0.8 1.8
Impact of reorganization of certain foreign subsidiaries — (1.0) —
Other - net (1.7) (0.2) 0.8
Total effective tax rate 34.1% 35.7% 33.6%
During the fourth quarter of 2013, we recognized a net tax benefit of $18 million as a result of the reorganization
of certain of our foreign subsidiaries. This included a $360 million tax benefit resulting from the reversal of a
deferred tax liability related to our decision to indefinitely reinvest the earnings of certain foreign subsidiaries which
was made in conjunction with the reorganization that occurred during the fourth quarter of 2013. Due to the fact
that these undistributed foreign earnings are no longer a source of future income against which the foreign tax
credits will be utilized, we also recognized a tax charge of $342 million to record a valuation allowance against
certain foreign tax credit carryforwards.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as
operating loss and tax credit carryforwards.