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50 | 2015 Annual Report
(13) Income Taxes
Pretax earnings from continuing operations consist of the following:
2013 2014 2015
United States $1,724 2,096 2,921
Non-U.S. 1,472 1,252 1,240
Total pretax earnings $3,196 3,348 4,161
The principal components of income tax expense follow:
2013 2014 2015
Current:
Federal $ 704 742 904
State and local 60 59 106
Non-U.S. 480 516 447
Deferred:
Federal (56) (129) 31
State and local 2 (5) —
Non-U.S. (60) (19) (60)
Income tax expense $1,130 1,164 1,428
Reconciliations of the U.S. federal statutory income tax rate to the Company’s effective tax rate follow:
2013 2014 2015
Federal statutory rate 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit 1.3 1.0 1.0
Non-U.S. rate differential (4.8) (4.2) (2.4)
Non-U.S. tax holidays (1.8) (1.1) (1.1)
U.S. manufacturing deduction (1.6) (1.5) (1.2)
Gains on divestitures — — 1.5
Spinoff-related — — 1.1
Goodwill impairment 4.8 5.3 —
Artesyn repatriation 2.2 — —
Other 0.2 0.3 0.4
Effective income tax rate 35.3% 34.8% 34.3%
Non-U.S. tax holidays reduce tax rates in certain foreign jurisdictions and are expected to expire over the next two years.
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.
2014 2015
Unrecognized tax benefits, beginning $127 120
Additions for current year tax positions 9 7
Additions for prior year tax positions 25 8
Reductions for prior year tax positions (19) (9)
Reductions for settlements with tax authorities (4) —
Reductions for expiration of statutes of limitations (18) (42)
Unrecognized tax benefits, ending $120 84
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 $47. The Company accrues interest and penalties related to