Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Components of income before income taxes

The components of income before income taxes are as follows for the three years ended December 31:



	2014		2013		2012
United States	$	1,094	$	1,018	$	1,155
International	2,439		2,547		2,719
Total Income before income taxes	$	3,533	$	3,565	$	3,874

Provision for Income Taxes

The provision for income taxes consists of the following for the three years ended December 31:



	2014		2013		2012
United States	$	348	$	314	$	395
International	846		841		848
Total Provision for income taxes	$	1,194	$	1,155	$	1,243

Schedule of Components of Income Tax Expense (Benefit)

Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in the current provision for taxes being higher (lower) than the total provision for income taxes as follows:



	2014			2013			2012
Goodwill and intangible assets	$	(40	)	$	(14	)	$	(7	)
Property, plant and equipment	(13		)	—			(13		)
Pension and other retiree benefits	19			85			(14		)
Stock-based compensation	11			10			5
Tax loss and tax credit carryforwards	5			(30		)	(39		)
Other, net	(19		)	(33		)	32
Total deferred tax provision	$	(37	)	$	18		$	(36	)

Effective tax rate reconciliation

The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as reflected in the Consolidated Statements of Income is as follows:



Percentage of Income before income taxes	2014		2013		2012
Tax at United States statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	0.7		0.4		0.7
Earnings taxed at other than United States statutory rate	(2.3	)	(1.4	)	(2.6	)
Charge for a foreign tax matter ⁽¹⁾	1.9		—		—
Other, net	(1.5	)	(1.6	)	(1.0	)
Effective tax rate	33.8	%	32.4	%	32.1	%

_________


⁽¹⁾	The charge for a foreign tax matter relates to a notice of an adverse decision in a foreign court regarding a tax position taken in prior years received by the Company in the second quarter of 2014.

Components of deferred tax assets (liabilities)

The components of deferred tax assets (liabilities) are as follows at December 31:



	2014			2013
Deferred tax liabilities:
Goodwill and intangible assets	$	(497	)	$	(475	)
Property, plant and equipment	(380		)	(375		)
Other	(266		)	(237		)
	(1,143		)	(1,087		)
Deferred tax assets:
Pension and other retiree benefits	638			448
Tax loss and tax credit carryforwards	33			28
Accrued liabilities	276			317
Stock-based compensation	119			116
Other	148			95
	1,214			1,004
Net deferred income taxes	$	71		$	(83	)



	2014			2013
Deferred taxes included within:
Assets:
Other current assets	$	256		$	284
Deferred income taxes	76			77
Liabilities:
Deferred income taxes	(261		)	(444		)
Net deferred income taxes	$	71		$	(83	)

Unrecognized tax benefits activity

Unrecognized tax benefits activity for the years ended December 31, 2014, 2013 and 2012 is summarized below:



	2014			2013			2012
Unrecognized tax benefits:
Balance, January 1	$	199		$	212		$	176
Increases as a result of tax positions taken during the current year	23			23			34
Decreases of tax positions taken during prior years	(11		)	(52		)	(6		)
Increases of tax positions taken during prior years	32			37			10
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations	(10		)	(22		)	(3		)
Effect of foreign currency rate movements	(15		)	1			1
Balance, December 31	$	218		$	199		$	212