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Income Taxes
6 Months Ended
Oct. 27, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The provision for income taxes consists of provisions for federal, state and foreign income taxes. The Company operates in an international environment with almost 70% of its sales outside the U.S.  Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, Italy, the United Kingdom and the United States. The Company has substantially concluded all national income tax matters for years through Fiscal 2011 for the United Kingdom, through Fiscal 2010 for the U.S., and through Fiscal 2008 for Australia, Canada, and Italy.
The quarterly income tax provision is ordinarily comprised of tax on ordinary income using the most recent estimated annual effective tax rate, adjusted for the effect of discrete items.  However, due to the recent acquisition of Heinz and related costs incurred, the restructuring and productivity charges and significant amount of special items anticipated for the remainder of the year, a reliable estimated annual effective tax rate does not currently exist.  Accordingly, the income tax benefit recognized for both the second quarter ending October 27, 2013, and the period February 8, 2013 through October 27, 2013, is the amount of tax expense associated with actual results generated in each period.
For the year to date Successor period ended October 27, 2013, the Company recorded a tax benefit of $220.7 million, or 87% of pretax loss. For the Predecessor period ended June 7, 2013, the Company recorded a tax expense of $61.1 million, or (46.9%) of pretax loss. For the six month period ending October 28, 2012, the Company recorded a tax expense of $92.6 million, or 13.6% of pretax income.
The tax benefit in the Successor period included a benefit of $105.6 million related to the impact on deferred taxes of a 300 basis point statutory tax rate reduction in the United Kingdom which was enacted during July 2013, and a favorable jurisdictional income mix. The benefit of the statutory tax rate reduction in the United Kingdom was significantly increased as compared to the prior year due to the increase in deferred tax liabilities recorded in purchase accounting for the Merger.
The tax provision for the Fiscal 2014 Predecessor period was principally caused by the effect of repatriation costs of approximately $100 million for earnings of foreign subsidiaries distributed during the period and the effect of current period nondeductible Merger related costs.
The tax provision for the six month period ending October 28, 2012 included a $63.0 million tax benefit that occurred as a result of an increase in the tax basis of both fixed and intangible assets resulting from a tax-free reorganization in a foreign jurisdiction, a $13.0 million tax benefit from an intangible asset revaluation for tax purposes elected by a foreign subsidiary, and a benefit of $9.7 million related to a 200 basis point statutory tax rate reduction also in the United Kingdom.
The total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $57.9 million and $45.4 million on October 27, 2013 and April 28, 2013, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $49.6 million and $38.3 million on October 27, 2013, and April 28, 2013, respectively. It is reasonably possible that the amount of unrecognized tax benefits will decrease by as much as $20.2 million in the next 12 months primarily due to the progression of state and foreign audits in process.
The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. The total amounts of interest accrued at October 27, 2013 and April 28, 2013 were $10.6 million and $8.5 million, respectively. The corresponding amounts of accrued penalties at October 27, 2013 and April 28, 2013 were $9.1 million and $6.9 million, respectively.