Honeywell 2013 Annual Report Download - page 90

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Tax expense (benefit)
2013 2012 2011
Years Ended December 31,
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 993 $584 $ 3
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 360 414
$1,450 $944 $417
2013 2012 2011
Years Ended December 31,
Tax expense consists of
Current:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 663 $470 $ 171
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 10 13
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428 380 564
$1,188 $860 $ 748
Deferred:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 160 $ 85 $(185)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 19 4
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (20) (150)
262 84 (331)
$1,450 $944 $ 417
2013 2012 2011
Years Ended December 31,
The U.S. statutory federal income tax rate is reconciled to
our effective income tax rate as follows:
Statutory U.S. federal income tax rate . . . . . . . . . . . . . . . . . . 35.0% 35.0% 35.0%
Taxes on foreign earnings below U.S. tax rate(1). . . . . . . . (7.2) (7.1) (18.9)
State income taxes(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 0.8 0.4
Manufacturing incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.9) (1.7) (1.8)
ESOP dividend tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) (0.6) (1.1)
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (0.4) (2.3)
Reserves for tax contingencies . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 (0.4) 5.2
All other items—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (1.2) 1.8
26.8% 24.4% 18.3%
(1) Net of changes in valuation allowance
The effective tax rate increased by 2.4 percentage points in 2013 compared to 2012. The year over
year increase was primarily attributable to lower mark-to-market pension expense in the U.S. Other
factors causing an increase in the effective tax rate include higher tax expense related to an increase in
tax reserves and higher state tax expense. These increases in the effective tax rate were partially offset
by tax benefits from retroactive law changes in the U.S. The Company’s foreign effective tax rate for
2013 was 19.0 percent, an increase of approximately 2.0 percentage points compared to 2012. The
year over year increase in the foreign effective tax rate was primarily attributable to higher expense
related to retroactive tax law changes in Germany and additional reserves in various jurisdictions,
coupled with higher earnings in higher tax rate jurisdictions. The effective tax rate was lower than the
U.S. statutory rate of 35 percent primarily due to overall foreign earnings taxed at lower rates.
78
HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)