Income Taxes

9 Months Ended

Sep. 26, 2015

Note 7. Income Taxes

		The provision for income taxes in the accompanying statement of income differs from the provision calculated
by applying the statutory federal income tax rate of 35% to income from continuing operations before provision for
income taxes due to the following:

				Nine Months Ended
			September 26,			September 27,
(In millions)				2015			2014

Provision for Income Taxes at Statutory Rate				$	473.8		$	542.5

Increases (Decreases) Resulting From:
	Foreign rate differential				(148.9)			(187.6)
	Income tax credits				(241.4)			(122.5)
	Manufacturing deduction				(27.2)			(26.6)
	Singapore tax holiday				(11.5)			(10.3)
	Impact of change in tax laws and apportionment on deferred taxes				(13.5)			(26.0)
	Nondeductible expenses				6.9			9.6
	Provision (reversal) of tax reserves, net				—			25.3
	Basis difference on disposal of businesses				—			26.3
	Tax return reassessments				(51.0)			(1.5)
	State income taxes, net of federal tax				(4.8)			27.7
	Other, net				(2.7)			1.7

		Provision for (benefit from) income taxes		$	(20.3)		$	258.6

In 2015, the company implemented tax planning initiatives related to non-U.S. subsidiaries. As a result of these initiatives, the company generated U.S. foreign tax credits of $112 million, offset in part by additional U.S. income taxes of $39 million on the related foreign income which reduced the benefit from the foreign tax rate differential in 2015.

In 2015, the company recorded discrete benefits totaling $51 million related to additional prior year foreign tax and other credits as well as restructuring and other costs associated with the 2014 acquisition of Life Technologies.

The company has significant activities in Singapore and has received considerable tax incentives. The local taxing authority granted the company pioneer company status which provides an incentive encouraging companies to undertake activities that have the effect of promoting economic or technological development in Singapore. This incentive equates to a tax exemption on earnings associated with most of the company’s manufacturing activities in Singapore and continues through December 31, 2021. The impact of this tax holiday decreased the annual effective tax rate by 0.8% and increased diluted earnings per share by approximately $0.03 in the first nine months of 2015.

The company’s unrecognized tax benefits increased to $274.4 million at September 26, 2015, from $214.1 million at December 31, 2014. Of the total increase, $70.0 million resulted from the utilization of deferred tax assets, offset in part by a reduction of $9.7 million from a resolution of an IRS audit of Life Technologies for which a reserve had previously been established.