XML 38 R18.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of Income before income taxes are as follows for the three years ended December 31:
|  | 2016 |  | 2015 |  | 2014
United States |  | $ | 1,191 |  |  | $ | 1,118 |  |  | $ | 1,094 |
International |  | 2,547 |  |  | 1,645 |  |  | 2,439 |
Total Income before income taxes |  | $ | 3,738 |  |  | $ | 2,763 |  |  | $ | 3,533 |
The Provision for income taxes consists of the following for the three years ended December 31:
|  | 2016 |  | 2015 |  | 2014
United States |  | $ | 395 |  |  | $ | 376 |  |  | $ | 348 |
International |  | 757 |  |  | 839 |  |  | 846 |
Total Provision for income taxes |  | $ | 1,152 |  |  | $ | 1,215 |  |  | $ | 1,194 |
Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in the current provision for taxes being higher (lower) than the total Provision for income taxes as follows:
|  | 2016 |  | 2015 |  | 2014
Goodwill and intangible assets |  | $ | 18 |  |  | $ | 3 |  |  | $ | (40 | )
Property, plant and equipment |  | (3 | ) |  | (25 | ) |  | (13 | )
Pension and other retiree benefits |  | — |  |  | 36 |  |  | 19 |
Stock-based compensation |  | 15 |  |  | 11 |  |  | 11 |
Tax loss and tax credit carryforwards |  | 5 |  |  | (4 | ) |  | 5 |
Other, net |  | (106 | ) |  | 98 |  |  | (19 | )
Total deferred tax benefit (provision) |  | $ | (71 | ) |  | $ | 119 |  |  | $ | (37 | )
The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as reflected in the Consolidated Statements of Income is as follows:
Percentage of Income before income taxes |  | 2016 |  | 2015 |  | 2014
Tax at United States statutory rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal benefit |  | 0.5 |  |  | 1.0 |  |  | 0.7 |
Earnings taxed at other than United States statutory rate |  | (2.7 | ) |  | (3.6 | ) |  | (2.3 | )
(Benefit) charge for previously disclosed tax matters(1) |  | (0.8 | ) |  | 0.5 |  |  | 1.9 |
(Benefit) on Venezuela remeasurement(2) |  | (5.6 | ) |  | — |  |  | — |
Tax charge on incremental repatriation of foreign earnings(2) |  | 5.6 |  |  | — |  |  | — |
Venezuela deconsolidation(3) |  | — |  |  | 12.8 |  |  | — |
Other, net |  | (1.2 | ) |  | (1.7 | ) |  | (1.5 | )
Effective tax rate |  | 30.8 | % |  | 44.0 | % |  | 33.8 | %
_________
(1) | The benefit from a previously disclosed tax matter in 2016 relates to several Supreme Court and Administrative Court rulings in a foreign jurisdiction allowing certain tax deductions which had the effect of reversing prior decisions. The charge for a previously disclosed tax matter in 2015 relates to several Supreme Court rulings in a foreign jurisdiction disallowing certain tax deductions which had the effect of reversing prior decisions. The charge for a foreign tax matter in 2014 relates to a notice of an adverse decision in a foreign court regarding a tax position taken in prior years.
(2) | The effective tax rate in 2016 included a $210 U.S. income tax benefit recognized in the first quarter of 2016 principally related to changes in Venezuela’s foreign exchange regime implemented in March 2016. Although, effective December 31, 2015, the operating results of CP Venezuela are no longer included in the Company’s Consolidated Financial Statements, under current tax rules, the Company is required to continue including CP Venezuela’s results in its consolidated U.S. federal income tax return. In order to fully recognize the $210 tax benefit in 2016, the Company repatriated an incremental $1,500 of earnings of foreign subsidiaries it previously considered indefinitely reinvested outside of the U.S., and accordingly, recorded a tax charge of $210 during the first quarter of 2016.
(3) | See Note 14, Venezuela.
The components of deferred tax assets (liabilities) are as follows at December 31:
|  | 2016 |  | 2015
Deferred tax liabilities: |  |  |  |
Goodwill and intangible assets |  | $ | (451 | ) |  | $ | (458 | )
Property, plant and equipment |  | (380 | ) |  | (380 | )
Other |  | (202 | ) |  | (150 | )
|  | (1,033 | ) |  | (988 | )
Deferred tax assets: |  |  |  |  |  |
Pension and other retiree benefits |  | 599 |  |  | 541 |
Tax loss and tax credit carryforwards |  | 34 |  |  | 30 |
Accrued liabilities |  | 246 |  |  | 235 |
Stock-based compensation |  | 127 |  |  | 123 |
Other |  | 82 |  |  | 151 |
|  | 1,088 |  |  | 1,080 |
Net deferred income taxes |  | $ | 55 |  |  | $ | 92 |
|  | 2016 |  | 2015
Deferred taxes included within: |  |  |  |
Assets: |  |  |  |
Other current assets(1) |  | $ | — |  |  | $ | 258 |
Deferred income taxes |  | 301 |  |  | 67 |
Liabilities: |  |  |  |
Deferred income taxes |  | (246 | ) |  | (233 | )
Net deferred income taxes |  | $ | 55 |  |  | $ | 92 |
________ (1) As permitted, the Company early adopted ASU 2015-17 on March 31, 2016 on a prospective basis. The new guidance eliminated the requirement to separate deferred income taxes into current and noncurrent. See Note 2, Summary of Significant Accounting Policies for additional details. Applicable U.S. income and foreign withholding taxes have not been provided on approximately $3,400 of undistributed earnings of foreign subsidiaries at December 31, 2016. These earnings have been and currently are considered to be indefinitely reinvested outside of the U.S. and currently are not subject to such taxes. As the Company operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws and the assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these earnings were repatriated. In addition, net tax benefit of $85 in 2016, net tax expense of $78 in 2015, and net tax benefit of $251 in 2014 recorded directly through equity predominantly include current and future tax impacts related to employee equity compensation and benefit plans. The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on an income tax return. Unrecognized tax benefits activity for the years ended December 31, 2016, 2015 and 2014 is summarized below:
|  | 2016 |  | 2015 |  | 2014
Unrecognized tax benefits: |  |  |  |  |  |
Balance, January 1 |  | $ | 186 |  |  | $ | 218 |  |  | $ | 199 |
Increases as a result of tax positions taken during the current year |  | 9 |  |  | 20 |  |  | 23 |
Decreases of tax positions taken during prior years |  | (45 | ) |  | (25 | ) |  | (11 | )
Increases of tax positions taken during prior years |  | 71 |  |  | 61 |  |  | 32 |
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations |  | (18 | ) |  | (79 | ) |  | (10 | )
Effect of foreign currency rate movements |  | (2 | ) |  | (9 | ) |  | (15 | )
Balance, December 31 |  | $ | 201 |  |  | $ | 186 |  |  | $ | 218 |
If all of the unrecognized tax benefits for 2016 above were recognized, approximately $180 would impact the effective tax rate and would result in a cash outflow of approximately $175. Although it is possible that the amount of unrecognized benefits with respect to our uncertain tax positions will increase or decrease in the next 12 months, the Company does not expect material changes. The Company recognized approximately $2, $2 and $4 of interest expense related to the above unrecognized tax benefits within income tax expense in 2016, 2015 and 2014, respectively. The Company had accrued interest of approximately $17, $16 and $24 as of December 31, 2016, 2015 and 2014, respectively. The Company and its subsidiaries file U.S. federal income tax returns as well as income tax returns in many state and foreign jurisdictions. All U.S. federal income tax returns through December 31, 2011 have been audited by the IRS and there are limited matters which the Company plans to appeal for years 2010 through 2011, the settlement of which is not expected to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. With a few exceptions, the Company is no longer subject to U.S. state and local income tax examinations for income tax returns through December 31, 2011. In addition, the Company has subsidiaries in various foreign jurisdictions that have statutes of limitations for tax audits generally ranging from three to six years.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration