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Income Taxes
6 Months Ended
Jun. 28, 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 June 28, 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 first half period ended June 28, 2013 decreased to 29.8% from 33.9% for the first half period ended June 29, 2012. The decrease was primarily due to tax benefits in the first half period ended June 28, 2013 of: (1) $15 million related to the retroactive reinstatement of the U.S. Federal research and experimentation tax credit (R&E Credit), for all of 2012 and 2013, of which $10 million relates to 2012 benefit, and $5 million relates to the benefit for the first half period ended June 28, 2013 and (2) $8 million primarily related to the reversal of amounts accrued for foreign taxes for years in which the statute of limitations expired and to the finalization of tax returns in certain foreign jurisdictions. 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 of June 28, 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 June 28, 2013 and $11 million ($6 million after income taxes) at December 31, 2012, and potential penalties of $7 million at June 28, 2013 and $7 million at December 31, 2012.