Issue link: http://catalog.e-digitaleditions.com/i/114936
NOTE 9 - RESTRUCTURING CHARGES In 2012 and 2011 we recorded $40 and $38, respectively, in severance and related costs in connection with a focused reduction of our global workforce and other restructuring activities expected to reduce our global workforce by approximately 5%. The targeted reductions and other restructuring activities were initiated to provide efficiencies and realign resources in advance of the Medical Device Excise Tax, as well as to allow for continued investment in strategic areas and drive growth. In addition, in 2012 and 2011 we recorded $7 and $25, respectively, in asset impairment, $3 and $6, respectively, in agent conversion and $25 and $7, respectively, in contractual and other obligations, as certain of our restructuring actions resulted in the discontinued use of specific assets and the exit of certain lease and other commitments. We expect our current restructuring actions and related cash payments will be completed by the end of 2013. A summary of our restructuring liability balance and full-year restructuring activity is as follows: Total 2012 January 1 Balance Charges to earnings Cash paid Other adjustments December 31 Balance 2011 $ Agent Conversion 2010 28 $ 3 $ 75 76 (59) (29) (4) (22) $ 40 $ 28 $ 2012 12 $ ��� (9) ��� 3 $ 2011 9 $ 3 (7) ��� 5 $ Asset Impairment 2010 ��� $ 6 ��� 3 9 $ 2012 6 $ ��� (6) ��� ��� $ 2011 2010 ��� $ ��� $ 7 25 ��� ��� (7) (25) ��� $ ��� $ ��� ��� ��� ��� ��� Severance and Related Costs 2012 2011 2010 $ 10 $ 1 $ 40 38 (32) (29) 2 ��� $ 20 $ 10 $ Contractual Obligations and Other 2012 2011 2010 3 $ 9 $ ��� 25 (2) (20) ��� 1 1 $ 15 $ 2 $ 7 ��� ��� 9 $ 3 ��� (1) ��� 2 NOTE 10 - INCOME TAXES Earnings before income taxes consisted of: 2012 United States International $ 2011 591 1,114 1,705 $ $ 2010 613 1,073 1,686 $ $ 566 1,163 1,729 $ Income taxes consisted of: 2012 Current income tax expense United States federal United States state and local International Total current income tax expense Deferred income tax expense (benefit) United States federal United States state and local International Total deferred income tax benefit Total income tax expense Interest expense and penalties included in other income (expense) $ 2011 227 41 178 446 $ 100 33 372 505 (12) (9) (18) (39) 407 $ 2010 $ 308 21 231 560 (16) (9) (139) (164) 341 (4) $ 36 (81) (2) (21) (104) 456 $ (24) In 2011 we recorded an income tax benefit related to a favorable settlement with the United States Internal Revenue Service (IRS) regarding its proposed adjustment to our previously filed 2003 through 2007 income tax returns related to income tax positions we had taken for our cost sharing arrangements with two wholly-owned entities operating in Ireland, and we recorded charges for other uncertain tax positions related to the outcome of the IRS settlements. The net income tax benefit of these adjustments was $82. Reconciliation of the United States federal statutory income tax rate to our effective income tax rate: 2012 United States federal statutory income tax rate Add (deduct): United States state and local income taxes, less federal deduction International operations Repatriation of foreign earnings Other 36 2011 2010 35.0% 35.0% 35.0% 1.7 (12.1) (0.4) (0.3) 23.9% 0.9 (13.7) 1.1 (3.1) 20.2% 0.9 (12.1) (0.4) 3.0 26.4% Dollar amounts in millions except per share amounts or as otherwise specified