Income taxes

The consolidated effective tax rate for the quarter ended October 3, 2015 was 24% as compared to the prior year’s rate of 28%. The consolidated effective tax rates for the year-to-date periods ended October 3, 2015 and September 27, 2014 were 26% and 29%, respectively. The effective tax rate for 2015 benefited from a reduction in tax related to current year remitted and unremitted earnings and the completion of certain tax examinations.

As of October 3, 2015, the Company classified $17 million of unrecognized tax benefits as a net current liability. 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 approximately $7 million of projected additions related primarily to ongoing intercompany transfer pricing activity. 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 October 3, 2015; $51 million of this total represents the amount that, if recognized, would affect the Company’s effective income tax rate in future periods.



(millions)
January 3, 2015	$	78
Tax positions related to current year:
Additions	5
Reductions	—
Tax positions related to prior years:
Additions	3
Reductions	(10		)
Settlements	(2		)
October 3, 2015	$	74

For the quarter ended October 3, 2015, the Company recognized a decrease of $1 million for tax-related interest and penalties. For the year-to-date period ended October 3, 2015, the Company recognized a $1 million reduction in tax-related interest and penalties. The Company recognized no cash settlements during the current quarter or year-to-date periods. The accrual balance was $19 million at October 3, 2015.