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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Schedule of Additional Income Tax Disclosures [Table Text Block]
Cash payments of income taxes were as follows:
 
2015
 
2014
 
2013
Cash payments of income taxes
$
969.0

 
$
729.7

 
$
1,255.6
Income Taxes [Text Block]
Note 13: Income Taxes
Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. Federal income taxes are provided on the portion of the income of foreign subsidiaries that is expected to be remitted to the U.S. and be taxable. When foreign earnings are expected to be indefinitely reinvested outside the U.S., no accrual for U.S. income taxes is provided.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.
Following is the composition of income tax expense:
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
Federal
$
660.5

 
$
168.9

 
$
259.1

Foreign
422.0

 
406.2

 
553.2

State
47.5

 
(2.1
)
 
126.3

Total current tax expense
1,130.0

 
573.0

 
938.6

Deferred:
 
 
 
 
 
Federal
(689.6
)
 
(83.3
)
 
297.0

Foreign
(66.0
)
 
120.2

 
(28.2
)
State
7.2

 
(0.1
)
 
(2.9
)
Total deferred tax (benefit) expense
(748.4
)
 
36.8

 
265.9

Income taxes
$
381.6

 
$
609.8

 
$
1,204.5


Significant components of our deferred tax assets and liabilities as of December 31 are as follows:
 
2015
 
2014
Deferred tax assets:
 
 
 
Compensation and benefits
$
1,034.6

 
$
976.3

Purchases of intangible assets
637.2

 
473.3

Tax credit carryforwards and carrybacks
294.2

 
279.4

Tax loss carryforwards and carrybacks
247.8

 
265.5

Contingent consideration
214.6

 
—

Product return reserves
212.1

 
241.8

Other comprehensive loss on hedging transactions
129.7

 
115.3

Debt
111.3

 
176.0

Other
628.6

 
623.2

Total gross deferred tax assets
3,510.1

 
3,150.8

Valuation allowances
(590.3
)
 
(601.1
)
Total deferred tax assets
2,919.8

 
2,549.7

Deferred tax liabilities:
 
 
 
Inventories
(771.3
)
 
(684.6
)
Intangibles
(756.3
)
 
(582.6
)
Property and equipment
(411.6
)
 
(424.7
)
Prepaid employee benefits
(317.8
)
 
(275.8
)
Unremitted earnings
(218.8
)
 
(737.1
)
Financial instruments
(152.6
)
 
(276.8
)
Total deferred tax liabilities
(2,628.4
)
 
(2,981.6
)
Deferred tax assets (liabilities) - net
$
291.4

 
$
(431.9
)

The deferred tax asset and related valuation allowance amounts for U.S. federal and state net operating losses and tax credits shown above have been reduced for differences between financial reporting and tax return filings.
Based on filed tax returns, we have tax credit carryforwards and carrybacks of $668.5 million available to reduce future income taxes; $180.5 million, if unused, will expire by 2021. The remaining portion of the tax credit carryforwards is related to federal tax credits of $93.4 million, international tax credits of $100.6 million, and state tax credits of $294.0 million, all of which are substantially reserved.
At December 31, 2015, based on filed tax returns we had net operating losses and other carryforwards for international and U.S. federal income tax purposes of $462.0 million: $38.0 million will expire by 2020; $354.0 million will expire between 2020 and 2035; and $70.0 million of the carryforwards will never expire. Net operating losses and other carryforwards for international and U.S. federal income tax purposes are partially reserved. Deferred tax assets related to state net operating losses of $93.2 million and other state carryforwards of $8.8 million are fully reserved.
Domestic and Puerto Rican companies contributed approximately 35 percent, 20 percent, and 60 percent for the years ended December 31, 2015, 2014, and 2013, respectively, to consolidated income before income taxes. We have a subsidiary operating in Puerto Rico under a tax incentive grant effective through the end of 2016. A similar, new tax incentive grant will begin in 2017 and will be in effect for 15 years.
At December 31, 2015, U.S. income taxes have not been provided on approximately $26.5 billion of unremitted earnings of foreign subsidiaries as we consider these unremitted earnings to be indefinitely invested for continued use in our foreign operations. Additional tax provisions will be required if these earnings are repatriated in the future to the U.S. Due to complexities in the tax laws and assumptions that we would have to make, it is not practicable to determine the amount of the related unrecognized deferred income tax liability.
Cash payments of income taxes were as follows:
 
2015
 
2014
 
2013
Cash payments of income taxes
$
969.0

 
$
729.7

 
$
1,255.6


Following is a reconciliation of the income tax expense applying the U.S. federal statutory rate to income before income taxes to reported income tax expense:
 
2015
 
2014
 
2013
Income tax at the U.S. federal statutory tax rate
$
976.5

 
$
1,050.1

 
$
2,061.3

Add (deduct):
 
 
 
 
 
International operations, including Puerto Rico
(565.2
)
 
(344.8
)
 
(778.3
)
General business credits
(69.2
)
 
(44.3
)
 
(175.6
)
Other
39.5

 
(51.2
)
 
97.1

Income taxes
$
381.6

 
$
609.8

 
$
1,204.5


The American Taxpayer Relief Act of 2012, which included the reinstatement of the research tax credit for the year 2012, was enacted in early 2013. Therefore, the research tax credits for the years 2012 and 2013 are both included in 2013 with general business credits.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
 
2015
 
2014
 
2013
Beginning balance at January 1
$
1,338.8

 
$
1,136.4

 
$
1,534.3

Additions based on tax positions related to the current year
131.3

 
126.4

 
142.5

Additions for tax positions of prior years
116.6

 
132.6

 
251.5

Reductions for tax positions of prior years
(45.2
)
 
(32.1
)
 
(358.2
)
Settlements
(446.2
)
 
(4.2
)
 
(404.9
)
Lapses of statutes of limitation
(4.0
)
 
(3.5
)
 
(24.9
)
Changes related to the impact of foreign currency translation
(24.7
)
 
(16.8
)
 
(3.9
)
Ending balance at December 31
$
1,066.6

 
$
1,338.8

 
$
1,136.4


The total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was $404.1 million and $638.8 million at December 31, 2015 and 2014, respectively.
We file income tax returns in the U.S. federal jurisdiction and various state, local, and non-U.S. jurisdictions. We are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations in most major taxing jurisdictions for years before 2007.
During 2013, we reached resolution on the remaining matters related to tax years 2008–2009 that were not settled as part of a previous U.S. examination. Considering the impact of this resolution on periods that have not yet been examined, as well as its impact on tax asset carryforwards, there was an immaterial benefit to our consolidated results of operations. We made cash payments of approximately $135 million related to tax years 2008–2009 after application of available tax credit carryforwards and carrybacks.
The U.S. examination of tax years 2010-2012 commenced during the fourth quarter of 2013 and is expected to conclude in the first quarter of 2016. In December 2015, we executed a closing agreement with the Internal Revenue Service which effectively settled certain matters for tax years 2010-2012. Accordingly, we have reduced our gross uncertain tax positions by approximately $320 million in 2015. There was an immaterial impact to our consolidated results of operations during the fourth quarter related to issues settled in the closing agreement. In the first quarter of 2016, we anticipate reaching resolution on the remaining issues under examination and estimate that our gross uncertain tax positions will further be reduced by approximately $100 million to $150 million. Additionally, we do not anticipate that resolution of the U.S. examination will result in a material change to our consolidated financial position, and we expect that up to $250 million of cash payments will be due upon resolution of these tax years. We expect the U.S. examination of tax years 2013-2014, and possibly 2015, to begin in 2016.
We recognize both accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized income tax (benefit) expense related to interest and penalties as follows:
 
2015
 
2014
 
2013
Income tax (benefit) expense
$
13.2

 
$
35.9

 
$
(10.9
)

At December 31, 2015 and 2014, our accruals for the payment of interest and penalties totaled $216.3 million and $207.2 million, respectively.
Following is the composition of income tax expense:
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
Federal
$
660.5

 
$
168.9

 
$
259.1

Foreign
422.0

 
406.2

 
553.2

State
47.5

 
(2.1
)
 
126.3

Total current tax expense
1,130.0

 
573.0

 
938.6

Deferred:
 
 
 
 
 
Federal
(689.6
)
 
(83.3
)
 
297.0

Foreign
(66.0
)
 
120.2

 
(28.2
)
State
7.2

 
(0.1
)
 
(2.9
)
Total deferred tax (benefit) expense
(748.4
)
 
36.8

 
265.9

Income taxes
$
381.6

 
$
609.8

 
$
1,204.5
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
Significant components of our deferred tax assets and liabilities as of December 31 are as follows:
 
2015
 
2014
Deferred tax assets:
 
 
 
Compensation and benefits
$
1,034.6

 
$
976.3

Purchases of intangible assets
637.2

 
473.3

Tax credit carryforwards and carrybacks
294.2

 
279.4

Tax loss carryforwards and carrybacks
247.8

 
265.5

Contingent consideration
214.6

 
—

Product return reserves
212.1

 
241.8

Other comprehensive loss on hedging transactions
129.7

 
115.3

Debt
111.3

 
176.0

Other
628.6

 
623.2

Total gross deferred tax assets
3,510.1

 
3,150.8

Valuation allowances
(590.3
)
 
(601.1
)
Total deferred tax assets
2,919.8

 
2,549.7

Deferred tax liabilities:
 
 
 
Inventories
(771.3
)
 
(684.6
)
Intangibles
(756.3
)
 
(582.6
)
Property and equipment
(411.6
)
 
(424.7
)
Prepaid employee benefits
(317.8
)
 
(275.8
)
Unremitted earnings
(218.8
)
 
(737.1
)
Financial instruments
(152.6
)
 
(276.8
)
Total deferred tax liabilities
(2,628.4
)
 
(2,981.6
)
Deferred tax assets (liabilities) - net
$
291.4

 
$
(431.9
)
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]
Following is a reconciliation of the income tax expense applying the U.S. federal statutory rate to income before income taxes to reported income tax expense:
 
2015
 
2014
 
2013
Income tax at the U.S. federal statutory tax rate
$
976.5

 
$
1,050.1

 
$
2,061.3

Add (deduct):
 
 
 
 
 
International operations, including Puerto Rico
(565.2
)
 
(344.8
)
 
(778.3
)
General business credits
(69.2
)
 
(44.3
)
 
(175.6
)
Other
39.5

 
(51.2
)
 
97.1

Income taxes
$
381.6

 
$
609.8

 
$
1,204.5
Summary of Income Tax Contingencies [Table Text Block]
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
 
2015
 
2014
 
2013
Beginning balance at January 1
$
1,338.8

 
$
1,136.4

 
$
1,534.3

Additions based on tax positions related to the current year
131.3

 
126.4

 
142.5

Additions for tax positions of prior years
116.6

 
132.6

 
251.5

Reductions for tax positions of prior years
(45.2
)
 
(32.1
)
 
(358.2
)
Settlements
(446.2
)
 
(4.2
)
 
(404.9
)
Lapses of statutes of limitation
(4.0
)
 
(3.5
)
 
(24.9
)
Changes related to the impact of foreign currency translation
(24.7
)
 
(16.8
)
 
(3.9
)
Ending balance at December 31
$
1,066.6

 
$
1,338.8

 
$
1,136.4

We recognize both accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized income tax (benefit) expense related to interest and penalties as follows:
 
2015
 
2014
 
2013
Income tax (benefit) expense
$
13.2

 
$
35.9

 
$
(10.9
)