11. Income Taxes

Our effective tax rates for the periods presented were as follows:


	Three Months Ended
	July 25, 2014			July 26, 2013
Effective tax rates		44.6	%		11.6	%

Our effective tax rates reflect the impact of a significant amount of our earnings being taxed in foreign jurisdictions at rates below the U.S. statutory tax rate. In addition, our effective tax rate for the three months ended July 25, 2014 was impacted by the settlement of an income tax audit as discussed below.

In July 2014, the Internal Revenue Service (IRS) completed the examination of our fiscal 2005 to 2007 income tax returns upon approval by the Joint Committee of Taxation. We recorded a $47.4 million income tax provision attributable to the audit settlement and related re-measurement of uncertain tax positions for tax years subject to future audits. The audit adjustments resulted in lower earnings in our foreign subsidiaries which reduced the taxability of dividends that were previously repatriated from such subsidiaries. As a result of this reduction in taxable dividends, we expect to receive a refund of $8.0 million, excluding interest, from the conclusion of the fiscal 2005 to 2007 income tax audit.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):


	Three Months Ended
	July 25, 2014			July 26, 2013
Balance at beginning of period	$	235.9		$	189.6
Additions based on tax positions related to the current year		6.8			7.2
Additions for tax positions of prior years		98.7			1.0
Decreases for tax positions of prior years		(18.6	)		(3.5	)
Settlements		(45.5	)		0.0

Balance at end of period	$	277.3		$	194.3

As of July 25, 2014, we had $277.3 million of gross unrecognized tax benefits, of which $223.6 million has been recorded in other long-term liabilities. Unrecognized tax benefits of $172.9 million, including penalties, interest and indirect benefits, would affect our provision for income taxes if recognized.

We are currently undergoing federal income tax audits in the United States and several foreign tax jurisdictions. Transfer pricing calculations are key issues under audits in various jurisdictions, and are often subject to dispute and appeals. The IRS is currently auditing our fiscal 2008 to 2010 income tax returns. We expect the IRS examination team to complete their field audit within the next twelve months. However, the resolution of the fiscal 2008 to 2010 income tax return audits may likely occur beyond the next twelve months should we choose to appeal the IRS examination team’s audit findings.

On September 17, 2010, the Danish Tax Authorities issued a decision concluding that distributions declared in 2005 and 2006 from our Danish subsidiary were subject to Danish at-source dividend withholding tax. We do not believe that our Danish subsidiary is liable for withholding tax and filed an appeal with the Danish Tax Tribunal to that effect. On December 19, 2011, the Danish Tax Tribunal issued a ruling that our Danish subsidiary was not liable for Danish withholding tax. The Danish tax examination agency appealed to the Danish High Court in March 2012.

In April 2010, our Dutch subsidiary received a favorable tax ruling from the Dutch tax authorities, effective May 1, 2010, that replaces the previous Dutch tax ruling that expired on April 30, 2010. This ruling results in both a lower level of earnings subject to tax in the Netherlands and an extension of the expiration date to April 30, 2015.