
	Income Taxes

The Company's effective tax rate (ETR) was 20.6% and 27.9% for the quarter and nine months ended December 28, 2012, respectively, and 2.6% and 1.8% for the quarter and nine months ended December 30, 2011, respectively. The following are the primary drivers of the ETR for the nine months ended December 28, 2012 and December 30, 2011. For the tax impact of discontinued operations, see Note 3.


•	During the third quarter and nine months ended December 28, 2012 there was a decrease in valuation allowances in non-U.S. jurisdictions due to (i) a shift in the global mix of income which impacted the ETR by 7.1% and 2.9%, respectively and (ii) expected capital gains from the sale of certain other assets which impacted the ETR by 5.6% and 2.3%, respectively.


•	During the second quarter of fiscal 2013, the Company released $6.4 million of its liability for uncertain tax positions related to prior year research and development credits which reduced the ETR for the nine months ended December 28, 2012 by 1.7%.

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During the third quarter of fiscal 2012, the Company recorded a $1,485 million charge related to the NHS contract. The Company established a full valuation allowance against the net operating losses in the U.K. and did not record a tax benefit for the NHS charge. The NHS charge had a significant impact on the ETR for the third quarter and nine months ended December 30, 2011 and was one of the primary drivers of the difference between the ETR and statutory tax rate of 35%.

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During the third quarter of fiscal 2012, as a result of the charge related to the NHS contract, the Company established a valuation allowance of approximately $65 million against the prior year ending net deferred tax assets of the U.K. operating entities. The valuation allowance had an unfavorable impact on the ETR for the third quarter and nine months ended December 30, 2011 of 4.5% and 1.5%, respectively.


•	During the second quarter of fiscal 2012, the Company settled various tax examinations and recognized income tax benefits related to audit settlements and the expiration of the statute of limitations of approximately $112 million which reduced the ETR for the nine months ended December 30, 2011 by 2.6%.

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During the second quarter of fiscal 2012, the Company recorded a $2.7 billion goodwill impairment charge, which was mostly not deductible for tax purposes. During the third quarter of fiscal 2012, the Company recorded an additional goodwill impairment charge of $60 million, which was also not deductible for tax purposes. The goodwill impairment charge had a significant impact on the ETR for the third quarter and nine months ended December 30, 2011 and was one of the primary drivers of the difference between the ETR and statutory tax rate of 35%.

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During the first quarter of fiscal 2012, the Company elected to change the tax status of one of its foreign subsidiaries. This change in tax status resulted in a deemed liquidation for U.S. tax purposes and triggered various deductions which resulted in an income tax benefit of approximately $32 million in continuing operations (the balance of the benefit is now shown in discontinued operations) and reduced the ETR for the nine months ended December 30, 2011 by 0.7%.

There were no material changes to uncertain tax positions as of the third quarter of fiscal 2013 compared to year-end of fiscal 2012.

It is reasonably possible that during the next twelve months the Company's liability for uncertain tax positions may change by a significant amount. The IRS is examining the Company's federal income tax returns for fiscal years 2008 through 2010, and the Company expects to reach a settlement during fiscal year 2014. The significant items subject to examination primarily include foreign income inclusions under subpart F and related foreign tax credits. In addition, the Company may settle certain other tax examinations, have lapses in statutes of limitations, or voluntarily settle income tax positions in negotiated settlements for different amounts than the Company has accrued as uncertain tax positions. The Company may need to accrue and ultimately pay additional amounts for tax positions that previously met a more likely than not standard if such positions are not upheld. Conversely, the Company could settle positions with the tax authorities for amounts lower than those that have been accrued or extinguish a position through payment. The Company believes the outcomes which are reasonably possible within the next twelve months may result in a reduction in the liability for uncertain tax positions of up to $90 million, excluding interest, penalties, and tax carryforwards.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (Act) was enacted and extended several expired or expiring temporary business tax provisions, including the active financing income exception, the controlled foreign corporation look through rule, and the research and development credit. Pursuant to ASC 740, the effects of new legislation are recognized in the period of enactment. Therefore, the impact of the Act will be recorded in the fourth quarter and is expected to have a significant impact on the ETR.