Income Taxes

6 Months Ended

Jul. 02, 2011

Income Taxes

Income Taxes

Note 8 Income taxes

The consolidated effective tax rate for the quarter ended July 2, 2011, of 30% was comparable to prior year's rate of 30%.The consolidated effective tax rate for the year-to-date period ended July 2, 2011 was 29%, compared to the prior year-to-date period ended July 3, 2010 rate of 28%. Both year-to-date periods were positively impacted by discrete items. The effective rate for 2011 benefited from a first quarter international legal restructuring as well as the closing of various audits, while the effective rate for 2010 benefited from an immaterial correction of an item related to prior years.

As of July 2, 2011, the Company classified $12 million of unrecognized tax positions as a net current liability, representing several income tax positions under examination in various jurisdictions. Management's estimate of reasonably possible changes in unrecognized tax benefits during the next twelve months consists of the current liability balance, expected to be settled within one year, offset by $9 million of projected additions. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation in this estimate.

Following is a reconciliation of the Company's total gross unrecognized tax benefits for the year-to-date period ended July 2, 2011; $50 million of this total represents the amount that, if recognized, would affect the Company's effective income tax rate in future periods.

(millions)
January 1, 2011		$	104
Tax positions related to current year:
	Additions		5
Tax positions related to prior years:
	Additions		4
	Reductions		(14)
Settlements			(29)
July 2, 2011		$	70

The Company had the following amounts of income tax related interestaccrued as of January 1, 2011 and July 2, 2011.

(millions)
Interest accrued at January 1, 2011	$	26
Reduction of interest expense recognized for the year-to-date period ended July 2, 2011	$	(4)
Interest accrued at July 2, 2011	$	16