Income Taxes (Tables)

12 Months Ended

Dec. 30, 2017

Income Taxes

Income from continuing operations before income taxes

(In millions)		2017		2016		2015
U.S.	$	428	$	652	$	745
Non-U.S.		334		224		226
Income from continuing operations before income taxes	$	762	$	876	$	971

Income tax expense for continuing operations

(In millions)		2017		2016		2015
Current expense (benefit):
Federal	$	29	$	(74)	$	212
State		(9)		18		16
Non-U.S.		79		41		41
		99		(15)		269
Deferred expense (benefit):
Federal		358		47		17
State		(14)		(7)		(14)
Non-U.S.		13		8		1
		357		48		4
Income tax expense	$	456	$	33	$	273

Federal statutory income tax rate to effective income tax rate for continuing operations

	2017	2016	2015
U.S. Federal statutory income tax rate	35.0%	35.0%	35.0%
Increase (decrease) resulting from:
U.S. tax reform impact	34.9	—	—
Federal tax settlement of 1998 to 2008	—	(23.5)	—
State income taxes (net of federal impact)	(1.9)	0.8	0.2
Non-U.S. tax rate differential and foreign tax credits*	(2.9)	(2.7)	(3.6)
Domestic manufacturing deduction	(1.1)	(1.6)	(2.7)
Research credit	(2.6)	(3.2)	(1.5)
Other, net	(1.6)	(1.0)	0.7
Effective income tax rate	59.8%	3.8%	28.1%

* Included a favorable impact of (1.4)% in 2015 related to a net change in valuation allowances.

Reconciliation of unrecognized tax benefits

(In millions)		December 30, 2017		December 31, 2016		January 2, 2016
Balance at beginning of year	$	186	$	401	$	385
Additions for tax positions related to current year		8		12		12
Additions for tax positions of prior years		16		—		6
Additions for acquisitions		4		—		1
Reductions for settlements and expiration of statute of limitations		(17)		(219)		(2)
Reductions for tax positions of prior years		(15)		(8)		(1)
Balance at end of year	$	182	$	186	$	401

Deferred tax assets and liabilities

(In millions)		December 30, 2017		December 31, 2016
Deferred tax assets
Obligation for pension and postretirement benefits	$	247	$	529
Accrued expenses*		260		282
Deferred compensation		103		175
Loss carryforwards		214		158
Inventory		8		49
Allowance for credit losses		13		23
Other, net		32		67
Total deferred tax assets		877		1,283
Valuation allowance for deferred tax assets		(148)		(116)
		729		1,167
Deferred tax liabilities
Property, plant and equipment, principally depreciation		(125)		(168)
Amortization of goodwill and other intangibles		(154)		(164)
Leasing transactions		(81)		(147)
Prepaid pension benefits		(21)		(19)
Total deferred tax liabilities		(381)		(498)
Net deferred tax asset	$	348	$	669

*Accrued expenses included warranty reserves, self-insured liabilities and interest.

Breakdown of net deferred tax assets

(In millions)		December 30, 2017		December 31, 2016
Manufacturing group:
Other assets	$	430	$	793
Other liabilities		(7)		(4)
Finance group - Other liabilities		(75)		(120)
Net deferred tax asset	$	348	$	669

Operating loss and credit carryforward

(In millions)
Non-U.S. net operating loss with no expiration	$	201
Non-U.S. net operating loss expiring through 2036		59
U.S. federal net operating losses expiring through 2036		269
State net operating loss and tax credits, net of tax benefits, expiring through 2036		290