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14. INCOME TAXES
Provision for Income Taxes
The Provision for income taxes consisted of the following:
2014 2013 2012
Current:
Federal $ 28.4 $ 32.9 $ 27.3
Non-US 8.4 26.9 10.0
State and local 7.1 10.2 6.5
Total current 43.9 70.0 43.8
Deferred:
Federal (7.7) 25.9 10.7
Non-US (3.2) 12.8 2.4
State and local 1.3 (2.1) (2.1)
Total deferred (9.6) 36.6 11.0
Provision for income taxes $ 34.3 $ 106.6 $ 54.8
Earnings before income taxes were as follows:
2014 2013 2012
U.S. $ 77.8 $ 210.4 $ 111.2
Non-U.S. 35.6 158.0 51.2
Earnings before income taxes $ 113.4 $ 368.4 $ 162.4
The Company realized an income tax benefit from the exercise of certain stock options and/or vesting of certain RSUs and DSUs in
2014, 2013, and 2012 of $12.7 million, $7.0 million and $2.7 million, respectively. This benefit resulted in a decrease in current
income taxes payable.
A reconciliation of the provision for income taxes using the U.S. statutory rate and the Company’s effective tax rate was as follows:
2014 2013 2012
Amount % Amount % Amount %
Provision for income taxes at statutory rate $ 39.7 35.0 % $128.9 35.0 % $ 56.9 35.0 %
State and local income taxes, net of federal
tax benefit 4.8 4.3 9.6 2.6 4.0 2.5
Foreign tax differential (11.4) (10.1) (19.4) (5.3) (6.4) (3.9)
Research and development credit (6.2) (5.5) (11.5) (3.1) – –
Valuation allowance 0.8 0.7 (1.3) (0.4) – –
Adjustments to previously accrued taxes (2.6) (2.3) 0.8 0.2 (3.6) (2.2)
Adjustments to deferred tax assets 6.8 6.0 – –
– –
Other 2.4 2.1 (0.5) (0.1) 3.9 2.4
Provision for income taxes $ 34.3 30.2 %$106.6 28.9 % $ 54.8 33.8 %
The jurisdiction having the greatest impact on the foreign tax differential reconciling item is Switzerland.
The reconciling item for adjustments to previously accrued taxes represents adjustments to income tax expense amounts recorded in
prior years. For the years indicated, the principal reason for these adjustments was to record the release of uncertain tax positions
accrued in prior years. The adjustments to the uncertain tax positions were made either because the amount that the Company was
required to pay pursuant to an income tax audit was different than the amount the Company estimated it would have to pay or because
the statute of limitations governing the year of the accrual expired and no audit of that year was ever conducted by the local tax
authorities.
The effective income tax rate was 30.2% for the year ended December 31, 2014. The 1.3 percentage point increase of the effective tax
rate from 2013 to 2014 was due to the following factors: an increase due to a geographic shift in earnings away from lower tax
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