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Income Taxes
6 Months Ended
Oct. 25, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company’s effective tax rates for the three and six months ended October 25, 2013 were 19.2 percent and 18.2 percent, respectively, compared to 24.4 percent and 22.2 percent for the three and six months ended October 26, 2012, respectively. The changes in the Company’s effective tax rates for the three and six months ended October 25, 2013 were primarily due to the extension of the U.S. federal research and development tax credit on January 2, 2013, the tax impact of special charges, restructuring charges, certain litigation charges, net, and acquisition-related items, the finalization of certain income tax returns, changes to uncertain tax position reserves, and the tax impact of foreign dividend distributions recorded during the three months ended October 26, 2012. During the three months ended October 25, 2013, the Company recorded a $4 million net benefit associated with the finalization of certain income tax returns and changes to uncertain tax position reserves. These tax adjustments are operational in nature and are recorded in the provision for income taxes on the condensed consolidated statement of earnings.
During the six months ended October 25, 2013, the Company’s gross unrecognized tax benefits increased from $1.068 billion to $1.143 billion. In addition, the Company has accrued interest and penalties of $107 million as of October 25, 2013. If all of the Company’s unrecognized tax benefits were recognized, approximately $1.104 billion would impact the Company’s effective tax rate. The Company expects to receive an IRS audit report for fiscal years 2009 through 2011 within the next 12 months. Therefore, the Company has recorded $51 million of the gross unrecognized tax benefit in current accrued income taxes in the condensed consolidated balance sheet as of October 25, 2013 as it expects to make cash payments within the next 12 months. The remaining gross unrecognized tax benefits have been recorded in long-term accrued income taxes in the condensed consolidated balance sheet. The receipt of the IRS audit report for fiscal years 2009 through 2011 could significantly impact the total amount of unrecognized tax benefits, however, at this time the Company is unable to reasonably estimate the potential change.
The Company will continue to recognize interest and penalties related to income tax matters in the provision for income taxes in the condensed consolidated statements of earnings and record the liability in current or long-term accrued income taxes in the condensed consolidated balance sheets, as appropriate.
As of October 25, 2013, there were no changes to significant unresolved matters with the U.S. Internal Revenue Service or foreign tax authorities from what the Company disclosed in its Annual Report on Form 10-K for the year ended April 26, 2013.