INCOME TAXES

The following table provides a reconciliation of the provision for income taxes on the condensed consolidated statements of income:



	Three Months Ended
	March 29, 2014			March 30, 2013
Income from continuing operations before income taxes	$	42,986		$	35,648
Effective tax rate	24.1		%	27.3		%
Provision for income taxes	$	10,358		$	9,722

Our overall effective tax rate was 24.1% in the first quarter of 2014 and 27.3% in the first quarter of 2013. The decrease was primarily attributable to a $1,837 release of an uncertain tax position resulting from the ability to offset a capital gain from an investment in a limited partnership. The effective tax rate for the first quarter of 2014 reflects a discrete benefit of $238 resulting from the settlement of a Canadian tax controversy related to headquarter service charges for the tax years 2006 through 2009. In addition, in the first quarter of 2014, we reorganized our UK RMS operations. The purpose of this reorganization was to streamline the legal entity structure in order to improve the operating efficiency, facilitate acquisitions, and provide tax benefits. The reorganization, which did not involve reductions of personnel or facility closures, resulted in a one-time tax cost in the first quarter of 2014 of $1,220 due primarily to the write-off of deferred tax assets.

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The ASU requires an entity to present an unrecognized tax benefit as a reduction of the deferred tax asset for a net operating loss, or similar loss or tax credit carryforward, as opposed to a liability, unless certain circumstances exist. The ASU does not require new disclosures and may be adopted either prospectively or retrospectively. The ASU become effective during our first fiscal quarter and we adopted the provisions of ASU 2013-11 retrospectively. The adoption of the ASU decreased net non-current deferred tax assets and decreased the associated long-term tax liabilities related to unrecognized tax benefits by $9,271 and $11,865 as of March 29, 2014 and December 28, 2013, respectively.

During the first quarter of 2014, our unrecognized tax benefits recorded decreased by $2,563 to $15,912 due primarily to the settlement of a Canadian tax controversy related to headquarter service charges for tax years 2006 through 2009 and the release of a portion of the uncertain tax position associated with an acquisition agreement termination fee to offset a capital gain.

The amount of unrecognized income tax benefits that would impact the effective tax rate favorably decreased by $2,719 to $14,293. The decrease was due primarily to the settlement of a Canadian tax controversy related to headquarter service charges for tax years 2006 through 2009 and the release of a portion of the uncertain tax position associated with an acquisition agreement termination fee to offset a capital gain. The amount of accrued interest on unrecognized tax benefits decreased by

by $24 to $667 in the first quarter of 2014 primarily due to the settlement of the Canadian tax controversy.

We conduct business in a number of tax jurisdictions. As a result, we are subject to tax audits in jurisdictions including, but not limited to, the United States, the United Kingdom, Japan, France, Germany, and Canada. With few exceptions, we are no longer subject to U.S. and international income tax examinations for years before 2010 although carryforward attributes that were generated prior to 2010 may still be adjusted upon examination by taxing authorities if they either have been, or will be, used in a future period. As of March 29, 2014, we anticipate the statue of limitations to expire within the next twelve months for a year which includes an uncertain tax position associated with an acquisition agreement termination fee. However, we do not expect the liability associated with this uncertain tax position to decrease until the statute expires on the year in which a carryforward attribute is utilized.

We and certain of our subsidiaries are currently under audit by various tax authorities in the U.S., Germany, and France. We do not believe that resolution of these controversies will have a material impact on our financial position or results of operations.

On December 30, 2013, the French government enacted anti-hybrid provisions in an attempt to further restrict the ability of companies to deduct interest in France for 2013 and beyond. We believe this new tax law should not apply to further restrict the deduction of interest by our French affiliates. However, future changes in or clarifications to the French anti-hybrid provisions could result in the disallowance of interest deducted by our French affiliates resulting in an increase to our effective tax rate in 2014 and beyond

On February 25, 2013, the German government enacted a tax law change that restricts the deductibility of losses in Germany. As of March 29, 2014, we believe that this new tax law should not apply to restrict the deduction of losses by our German affiliates. However, future changes in or clarifications to the German tax law may result in disallowing losses currently being deducted by our German affiliates and a corresponding increase to our effective tax rate in 2014 and beyond.

In accordance with our policy, the remaining undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested as of the end of the first quarter of 2014 as they are required to fund needs outside the U.S. and cannot be repatriated in a manner that is substantially tax free.

The income tax expense (benefit) related to items of other comprehensive income are as follows:



	Three Months Ended
	March 29, 2014			March 30, 2013
Income tax benefit related to foreign currency translation adjustment	$	(105	)	$	662
Income tax expense related to change in unrecognized pension gains, losses and prior service costs	124			242
Income tax expense related to items of other comprehensive income	$	19		$	904