Taxes on Earnings (Tables)

The provision for income taxes on earnings from continuing operations consists of the following:



	2014			2013			2012
Income taxes:
Currently payable:
Federal	$	252		$	268		$	221
State	30			24			29
Non-U.S.	42			47			43
	324			339			293
Deferred:
Federal	32			(58		)	31
State	2			(6		)	2
Non-U.S.	(11		)	—			(1		)
	23			(64		)	32
	$	347		$	275		$	325

Earnings from continuing operations before income taxes:
United States	$	995		$	815		$	918
Non-U.S.	78			140			131
	$	1,073		$	955		$	1,049

The following is a reconciliation of the effective income tax rate on continuing operations to the U.S. federal statutory income tax rate:



	2014		2013		2012
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes (net of federal tax benefit)	2.0		1.1		2.0
Tax effect of international items	(1.0	)	(2.6	)	(3.8	)
Settlement of tax contingencies	—		(0.1	)	(0.1	)
Federal manufacturing deduction	(2.3	)	(2.7	)	(1.9	)
Other	(1.4	)	(1.9	)	(0.2	)
Effective income tax rate	32.3	%	28.8	%	31.0	%

Deferred tax liabilities and assets are comprised of the following:



	2014			2013
Depreciation	$	300		$	302
Amortization	541			484
Other	17			66
Deferred tax liabilities	858			852
Benefits and compensation	294			316
Pension benefits	63			61
Tax loss carryforwards	49			95
Capital loss carryforwards	112			104
Other	70			73
Gross deferred tax assets	588			649
Deferred tax asset valuation allowance	(151		)	(148		)
Net deferred tax assets	437			501
Net deferred tax liability	$	421		$	351

A reconciliation of the activity related to unrecognized tax benefits follows:



	2014			2013			2012
Balance at beginning of year	$	61		$	48		$	43
Increases related to prior-year tax positions	—			28			2
Decreases related to prior-year tax positions	(1		)	(7		)	(1		)
Increases related to current-year tax positions	11			9			9
Settlements	—			(15		)	—
Lapse of statute	—			(2		)	(5		)
Balance at end of year	$	71		$	61		$	48