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103
benefit and associated valuation allowances. $4.6 million of this amount has no expiration period. The remaining state tax credit
amount of $3.6 million carryforward will begin to expire, if not utilized, between 2023 and 2030.
Deferred income taxes have not been provided for the undistributed earnings of foreign subsidiaries because such earnings are
indefinitely reinvested. Undistributed earnings of non-U.S. subsidiaries included in the consolidated retained earnings were
approximately $2,651.0 million as of December 31, 2015. It is not practicable to estimate the amount of additional tax that may be
payable on the foreign earnings as there is a significant amount of uncertainty with respect to determining the amount of foreign tax
credits as well as any additional local withholding tax that may arise from the distribution of these earnings. In addition, because such
earnings have been indefinitely reinvested in our foreign operations, repatriation would require liquidation of those investments or a
recapitalization of our foreign subsidiaries, the impact and effects of which are not readily determinable. The Company does not plan
to initiate any action that would precipitate the payment of income taxes.
Tax Positions
The amount of unrecognized tax benefits at December 31, 2015, was $63.9 million, of which $53.8 million would affect the
Company’s effective tax rate if recognized. The amount of unrecognized tax benefits at December 31, 2014, was $77.2 million of
which $45.5 million would affect the Company’s effective tax rate if recognized. The amount of unrecognized tax benefits at
December 31, 2013, was $67.7 million, all of which would affect the Company’s effective tax rate if recognized.
The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of its income tax provision. As
of December 31, 2015, 2014 and 2013, the Company had accrued interest and penalties of $8.7 million, $5.9 million and $2.9 million,
respectively. The Company recognized in its statements of earnings a net benefit (expense) for interest and penalties of $1.2 million,
$2.0 million and $1.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.
It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such
changes could occur based on the expiration of various statutes of limitations or the conclusion of ongoing tax audits in various
jurisdictions around the world. Accordingly, within the next 12 months, the Company estimates that its unrecognized tax benefits
amount could decrease by an amount in the range of $0.5 million to $13.0 million.
Several tax years are subject to examination by major tax jurisdictions. The IRS commenced an examination of the Company’s US
income tax returns for 2012 and 2013 in the fourth quarter of 2015; however, the IRS has not yet proposed any adjustments. The
Company’s US income tax returns prior to 2012 are no longer subject to IRS examination. In Switzerland, tax years 2011 and after are
subject to examination. In most of the other countries where the Company files income tax returns, 2009 is the earliest tax year that is
subject to examination. The Company believes that adequate amounts have been provided for any adjustments that may result from
those examinations.
A reconciliation of the total beginning and ending gross amounts of unrecognized tax benefits, included in Accrued liabilities and
Other liabilities on the Consolidated Statements of Financial Position, is as follows:
2015
2014
2013
Balance at January 1
$
77.2
$
67.7
$
55.1
Increases / (decreases) in unrecognized tax benefits as a result of tax
positions taken during a prior period
(32.1)
(3.3)
3.2
Increases / (decreases) in unrecognized tax benefits as a result of tax
positions taken during the current period
11.8
14.1
17.0
Increases / (decreases) in unrecognized tax benefits relating to
settlements with taxing authorities
(0.1)
(0.5)
(2.0)
Reductions to unrecognized tax benefits as a result of a lapse of the
applicable statute of limitations
(1.1)
(1.9)
(5.6)
Increases / (decreases) in unrecognized tax benefits as a result
of acquisitions
10.5
1.1
–
Increases / (decreases) in unrecognized tax benefits as a result
of cumulative translation adjustments / remeasurement
(2.3)
–
–
Balance at December 31
$
63.9
$
77.2
$
67.7
Other
Cash paid for income taxes was $51.8 million, $50.8 million and $60.8 million in 2015, 2014, and 2013, respectively.