Income Taxes (Tables)

12 Months Ended

Dec. 29, 2018

Income from continuing operations before income taxes

(In millions)		2018		2017		2016
U.S.	$	557	$	428	$	652
Non-U.S.		827		334		224

Income from continuing operations before income taxes	$	1,384	$	762	$	876

Income tax expense for continuing operations

(In millions)		2018		2017		2016
Current expense (benefit):
Federal	$	3	$	29	$	(74)
State		9		(9)		18
Non-U.S.		101		79		41

		113		99		(15)

Deferred expense (benefit):
Federal		60		358		47
State		(5)		(14)		(7)
Non-U.S.		(6)		13		8

		49		357		48

Income tax expense	$	162	$	456	$	33

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

	2018	2017	2016
U.S. Federal statutory income tax rate	21.0%	35.0%	35.0%
Increase (decrease) resulting from:
U.S. tax reform enactment impact	(1.0)	34.9	—
Federal tax settlement of 1998 to 2008	—	—	(23.5)
State income taxes (net of federal impact)	(0.1)	(1.9)	0.8
Non-U.S. tax rate differential and foreign tax credits	1.3	(2.9)	(2.7)
Domestic manufacturing deduction	—	(1.1)	(1.6)
Research credit*	(2.9)	(2.6)	(3.2)
Gain on business disposition, primarily in non-U.S. jurisdictions	(5.0)	—	—
Other, net	(1.6)	(1.6)	(1.0)

Effective income tax rate	11.7%	59.8%	3.8%

*Includes a favorable impact of (1.8)% in 2018 for the reassessment of reserves for uncertain tax positions.

Reconciliation of unrecognized tax benefits

(In millions)		December 29, 2018		December 30, 2017		December 31, 2016
Balance at beginning of year	$	182	$	186	$	401
Additions for tax positions related to current year		5		12		12
Additions for tax positions of prior years		13		16		—
Reductions for settlements and expiration of statute of limitations		(22)		(17)		(219)
Reductions for tax positions of prior years*		(37)		(15)		(8)

Balance at end of year	$	141	$	182	$	186

*In 2018, certain tax positions related to research credits were reduced by $25 million based on new information, including interactions with the tax authorities and recent audit settlements.

Deferred tax assets and liabilities

(In millions)		December 29, 2018		December 30, 2017
Obligation for pension and postretirement benefits	$	272	$	247
Accrued expenses (a)		236		260
Deferred compensation		96		103
U.S. operating loss and tax credit carryforwards (b)		212		208
Non-U.S. operating loss and tax credit carryforwards (c)		69		72
Valuation allowance on deferred tax assets		(157)		(148)
Property, plant and equipment, principally depreciation		(142)		(125)
Amortization of goodwill and other intangibles		(143)		(154)
Leasing transactions		(77)		(81)
Prepaid pension benefits		(21)		(21)
Other, net		(23)		(13)

Deferred taxes, net	$	322	$	348

(a)

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

(b)

At December 29, 2018, U.S. operating loss and tax credit carryforward benefits of $186 million expire through 2038 if not utilized and $26 million may be carried forward indefinitely.

(c)

At December 29, 2018, non-U.S. operating loss and tax credit carryforward benefits of $16 million expire through 2038 if not utilized and $53 million may be carried forward indefinitely.

Breakdown of net deferred tax assets

(In millions)		December 29, 2018		December 30, 2017
Manufacturing group:
Deferred tax assets, net of valuation allowance	$	397	$	430
Deferred tax liabilities		(5)		(7)
Finance group – Deferred tax liabilities		(70)		(75)

Net deferred tax asset	$	322	$	348