Emerson 2014 Annual Report Download - page 52

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2014 Emerson > 48
Following are changes in unrecognized tax benefits before considering recoverability of any cross-jurisdictional tax
credits (federal, state and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not
expected to change significantly within the next 12 months.
2013 2014
Unrecognized tax benefits, beginning $157 127
Additions for current year tax positions 8 9
Additions for prior year tax positions 14 25
Reductions for prior year tax positions (26) (19)
Reductions for settlements with tax authorities (4) (4)
Reductions for expiration of statutes of limitations (22) (18)
Unrecognized tax benefits, ending $127 120
If none of the unrecognized tax benefits shown is ultimately paid, the tax provision and the calculation of the
effective tax rate would be favorably impacted by $80. The Company accrues interest and penalties related to
income taxes in income tax expense. Total interest and penalties recognized were $3, $(6) and $(1) in 2014, 2013
and 2012, respectively. As of September 30, 2014 and 2013, total accrued interest and penalties were $25 and $27,
respectively.
The U.S. is the major jurisdiction for which the Company files income tax returns. Examinations by the U.S. Internal
Revenue Service are substantially complete through 2009. The status of state and non-U.S. tax examinations varies
due to the numerous legal entities and jurisdictions in which the Company operates.
The principal items that gave rise to deferred income tax assets and liabilities follow:
2013 2014
Deferred tax assets:
Net operating losses and tax credits $ 231 238
Accrued liabilities 262 311
Postretirement and postemployment benefits 102 93
Employee compensation and benefits 256 196
Pensions — 28
Other 124 137
Total $ 975 1,003
Valuation allowances $ (131) (154)
Deferred tax liabilities:
Intangibles $ (780) (649)
Pensions (38) —
Property, plant and equipment (255) (258)
Other (158) (98)
Total $(1,231) (1,005)
Net deferred income tax liability $ (387) (156)
Current deferred tax assets, net were $354 as of September 30, 2014 and 2013, and noncurrent deferred tax
liabilities, net were $510 and $741, respectively. Total income taxes paid were approximately $1,310, $1,270 and
$1,300 in 2014, 2013 and 2012, respectively. Approximately half of the $238 of net operating losses and tax credits
can be carried forward indefinitely, while the remainder expire over varying periods.