National Oilwell Varco 2011 Annual Report Download - page 95

Index to Financial Statements
Significant components of our deferred tax assets and liabilities were as follows (in millions):
$0.000 $0.000 $0.000
December 31,
2011 2010 2009
Deferred tax assets:
Allowances and operating liabilities $ 331 $ 344 $ 343
Net operating loss carryforwards 14 10 7
Postretirement benefits 14 17 12
Foreign tax credit carryforwards 106 220 
Other 151 75 28
616 666 390
Valuation allowance for deferred tax assets (13) (9) (8)
Total deferred tax assets 603 657 382
Deferred tax liabilities:
Tax over book depreciation 204 213 168
Intangible assets 1,398 1,307 1,413
Deferred income 226 456 363
Accrued U.S. tax on unremitted earnings 70 149 49
Other 168 211 98
Total deferred tax liabilities 2,066 2,336 2,091
Net deferred tax liability $ 1,463 $ 1,679 $ 1,709
The balance of unrecognized tax benefits at December 31, 2011 and 2010 was $131 million and $118 million, respectively. Included in the change in the balance of
unrecognized tax benefits for the period ended December 31, 2011 was an increase of $10 million associated with the acquisition of Ameron. Also included in the change in
the balance of unrecognized tax benefits for the period ended December 31, 2011 was an increase of $12 million of unrecognized tax benefits associated with certain tax
credits claimed in prior years plus the pricing of certain internal transfers of inventory that may not be accepted as a tax deduction in foreign jurisdictions. A $9 million
reduction in the balance of unrecognized tax benefits resulted from the lapse of applicable statutes of limitations in foreign jurisdictions. Of the net increase of $13 million in
the balance of unrecognized tax benefits, $10 million was recorded as an increase in Goodwill and $3 million was recorded as an increase of income tax expense in the current
year and is reflected in the other category in the income tax rate schedule above. These unrecognized tax benefits are included in the balance of other liabilities in the
Consolidated Balance Sheet at December 31, 2011. If the $131 million of unrecognized tax benefits accrued at December 31, 2011 are ultimately realized, $58 million would
be recorded as a reduction of income tax expense.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
$0,000 $0,000 $0,000
2011 2010 2009
Unrecognized tax benefit at beginning of year $ 118 $ 58 $ 61
Additions based on tax positions related to the current year 9 1 10
Additions for tax positions of prior years 13 82 
Reductions for tax positions of prior years  (5) (12)
Reductions for lapse of applicable statutes of limitations (9) (18) (1)
Unrecognized tax benefit at end of year $ 131 $ 118 $ 58
The Company does not anticipate that the total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statutes of limitation
within 12 months of this reporting date.
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