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48 Emerson > 2013 Annual Report
At September 30, 2013, there were no known contingent liabilities (including guarantees, pending litigation, taxes and
other claims) that management believes will be material in relation to the Company’s financial statements, nor were there
any material commitments outside the normal course of business.
(13) Income Taxes
Pretax earnings from continuing operations consist of the following:
2011 2012 2013
United States $1,891 1,742 1,724
Non-U.S. 1,740 1,373 1,472
Total pretax earnings from continuing operations $3,631 3,115 3,196
The principal components of income tax expense follow:
2011 2012 2013
Current:
Federal $ 503 750 704
State and local 37 61 60
Non-U.S. 477 466 480
Deferred:
Federal 149 (129) (56)
State and local 3 (4) 2
Non-U.S. (42) (53) (60)
Income tax expense $1,127 1,091 1,130
Reconciliations of the U.S. federal statutory tax rate to the Company’s effective tax rate follow:
2011 2012 2013
Federal rate 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit 0.7 1.3 1.3
Non-U.S. rate differential (3.5) (4.0) (4.8)
Non-U.S. tax holidays (1.0) (1.7) (1.8)
U.S. manufacturing deduction (1.1) (1.4) (1.6)
Goodwill impairment 0.2 4.6 4.8
Embedded computing and power repatriation — — 2.2
Other 0.7 1.2 0.2
Effective income tax rate 31.0% 35.0% 35.3%
Non-U.S. tax holidays reduce tax rates in certain foreign jurisdictions and are expected to expire over the next four years.
Following are reconciliations of the beginning and ending balances of unrecognized tax benefits before recoverability of
cross-jurisdictional tax credits (federal, state and non-U.S.) and temporary differences. The amount of unrecognized tax
benefits is not expected to significantly increase or decrease within the next 12 months.
2012 2013
Beginning balance $162 157
Additions for current year tax positions 11 8
Additions for prior year tax positions 21 14
Reduction for prior year tax positions (14) (26)
Reduction for settlements with tax authorities (5) (4)
Reduction for expirations of statute of limitations (18) (22)
Ending balance $157 127