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Income Taxes
3 Months Ended
Mar. 29, 2013
Income Tax Disclosure [Abstract]  
Income Taxes

10.  Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. As of March 29, 2013, the statutes of limitations for the Company’s U.S. Federal income tax returns for the years ended December 31, 2009 through 2011 were open. The U.S Internal Revenue Service (IRS) announced that it plans to commence an audit of the Company’s 2011 U.S. Federal tax return, the outcome of which cannot be predicted at this time.

 

The effective tax rate for the quarter ended March 29, 2013 decreased to 28.9% from 33.9% for the quarter ended March 30, 2012 due primarily to the retroactive reinstatement of the U.S. Federal research and experimentation tax credit (R&E Credit). The R&E Credit was retroactively reinstated from January 1, 2012 to December 31, 2013 as part of The American Taxpayer Relief Act of 2012, which was signed into law on January 2, 2013. Accounting standards for income taxes require that the impact for tax law changes be recognized in the period that the law is enacted. As a result, the Company recognized a $12 million tax benefit related to the R&E Credit during the first quarter ended March 29, 2013, of which $10 million was attributable to 2012.

As of March 29, 2013, the Company anticipates that unrecognized tax benefits will decrease by approximately $17 million over the next 12 months due to the potential resolution of unrecognized tax benefits involving several jurisdictions and tax periods. The actual amount of the decrease over the next 12 months could vary significantly depending on the ultimate timing and nature of any settlement.

Non-current income taxes payable include accrued potential interest of $11 million ($7 million after income taxes) at March 29, 2013 and $11 million ($6 million after income taxes) at December 31, 2012, and potential penalties of $6 million at March 29, 2013 and $7 million at December 31, 2012.