Income Taxes

12 Months Ended

Jun. 29, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 22: INCOME TAXES

The provisions for current and deferredincome taxes are summarized as follows:

		2012		2011		2010
		(In millions)
Current:
	United States	$	240.2	$	267.4	$	294.0
	International		6.2		3.4		(0.1)
	State and local		27.5		36.5		21.5
			273.9		307.3		315.4
Deferred:
	United States		15.9		4.9		(20.1)
	International		(2.8)		(0.1)		(2.4)
	State and local		(1.0)		(5.3)		2.5
			12.1		(0.5)		(20.0)
		$	286.0	$	306.8	$	295.4

The total income tax provision is summarized as follows:

	2012		2011		2010
	(In millions)
Continuing operations	$	286.0	$	306.8	$	295.4
Discontinued operations		(99.1)		(13.2)		(16.7)
Total income tax provision	$	186.9	$	293.6	$	278.7

The components of deferred income tax assets (liabilities) were as follows:

		2012					2011
		Current		Non-Current			Current		Non-Current
	(In millions)
Inventory valuations		$	30.3		$	—	$	30.1		$	—
Accruals			141.0			65.8		142.1			66.0
Depreciation			—			(17.8)		—			(50.6)
Domestic tax loss and credit carryforwards			—			29.1		—			38.3
International tax loss and credit carryforwards			—			40.3		—			39.6
International research and development expense deferrals			—			38.0		—			39.8
Acquired intangibles			—			(75.6)		—			(95.8)
Share-based compensation			—			42.0		—			40.0
Unfunded pension liability			—			15.1		—			15.7
Unrecognized tax benefits			—			7.7		—			9.0
All other — net			(5.6)			9.4		1.7			(10.5)
			165.7			154.0		173.9			91.5
Valuation allowance			(6.0)			(73.7)		(2.9)			(85.8)
		$	159.7		$	80.3	$	171.0		$	5.7

A reconciliation of the United States statutory income tax rate to our effective income tax rate follows:

	2012		2011		2010
U.S. statutory income tax rate	35.0	%	35.0	%	35.0	%
State taxes	1.4		1.8		1.3
International income	0.8		0.6		(0.2)
Research and development tax credit	(0.5)		(1.1)		(0.5)
U.S. production activity benefit	(3.0)		(2.5)		(1.4)
Other items	0.3		0.1		(0.5)
Effective income tax rate	34.0	%	33.9	%	33.7	%

We have made no provision for United States income taxes on $343.0 million of undistributed earnings of international subsidiaries because of our intention to reinvest those earnings indefinitely. Determination of unrecognized deferred U.S. tax liability for the undistributed earnings of international subsidiaries is not practicable. Tax loss and credit carryforwards as of June 29, 2012 have expiration dates ranging between one year and no expiration in certain instances. The amount of Federal, international, and state and local tax loss carryforwards as of June 29, 2012 were $40.1 million, $101.6 million and $41.3 million, respectively. Income (loss) from continuing operations before income taxes of international subsidiaries was $15.2 million, $(0.5) million and $3.0 million in fiscal 2012, 2011 and 2010, respectively. Income taxes paid were $205.2million, $322.4 million and $280.5 million in fiscal 2012, 2011 and 2010, respectively. The valuation allowance decreased $9.0 million from $88.7 million at the end of fiscal 2011 to $79.7 million at the end of fiscal 2012. The valuation allowance has been established for financial reporting purposes to offset certain domestic and foreign deferred tax assets due to uncertainty regarding our ability to realize them in the future.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	2012		2011		2010
	(In millions)
Balance at beginning of the fiscal year	$	48.4	$	33.2	$	23.1
Additions based on tax positions taken during the current fiscal year		2.7		3.2		6.1
Additions based on tax positions taken during prior fiscal years		10.4		18.4		7.6
Decreases based on tax positions taken during prior fiscal years		(11.7)		(3.1)		(0.2)
Decreases from settlements		(1.4)		(1.7)		―
Decreases from lapse of statutes of limitations		(0.1)		(1.6)		(3.4)
Balance at end of the fiscal year	$	48.3	$	48.4	$	33.2

As of June 29, 2012, we had $48.3 million of unrecognized tax benefits, of which $34.9 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized. As of July 1, 2011, we had $48.4 million of unrecognized tax benefits, of which $34.9 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized.

We recognize accrued interest and penalties related to unrecognized tax benefits as part of our income tax expense. We had accrued $8.2 million for the potential payment of interest and penalties as of June 29, 2012 (and this amount was not included in the $48.3million of unrecognized tax benefits balance at June 29, 2012 shown above) and $6.6 million of this total could favorably impact future tax rates.We had accrued $7.0 million for the potential payment of interest and penalties as of July 1, 2011 (and this amount was not included in the $48.4 million of unrecognized tax benefits balance at July 1, 2011 shown above) and $5.3 million of this total could favorably impact future tax rates.

We file numerous separate and consolidated income tax returns reporting our financial results and, where appropriate, those of our subsidiaries and affiliates, in the U.S. Federal jurisdiction, and various state, local and foreign jurisdictions. Pursuant to the Compliance Assurance Process, the Internal Revenue Service (“IRS”) is examining fiscal 2010, fiscal 2011, fiscal 2012 and fiscal 2013. We are currently under examination by the Canadian Revenue Agency for fiscal years 2007 through 2010, and we are appealing portions of a Canadian assessment relating to fiscal years 2000 through 2006. We are currently under examination or contesting proposed adjustments by various state and international tax authorities for fiscal years ranging from 1997 through 2010. It is reasonably possible that there could be a significant decrease or increase to our unrecognized tax benefit balance during the course of the next twelve months as these examinations continue, other tax examinations commence or various statutes of limitations expire. An estimate of the range of possible changes cannot be made because of the significant number of jurisdictions in which we do business and the number of open tax periods.