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Income Taxes
6 Months Ended
Jun. 30, 2012
Income Taxes
Income Taxes
The Company recognized income tax expense of $51.3 million and $87.9 million for the three and six month periods ended June 30, 2012 respectively, resulting in an effective tax rate of 24.9% and 24.2% respectively. The effective tax rate differs from the U.S. statutory tax rate for the three and six month periods ended June 30, 2012, primarily due to a portion of the Company's earnings realized in lower-taxed foreign jurisdictions and the completion of a foreign business integration structure, resulting in a tax benefit of $16.7 million in the quarter.
The income tax expense for the three and six month periods ended July 2, 2011, were $27.7 million and $50.9 million, respectively, resulting in an effective tax rate of 12.3% and 12.5% for the respective periods. The income tax expense for the three and six month periods include tax benefits of $48.5 million and$69.2 million, respectively, for the favorable settlement of certain tax contingencies. In addition, the effective tax rate differs from the U.S. statutory tax rate for the three and six month periods ended July 2, 2011, primarily due to a portion of the Company's earnings realized in lower-taxed foreign jurisdictions, partially offset by the inclusion of $17.5 million of uncertain tax positions in the current period related to ongoing operational and legal entity integrations.
The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other taxing authorities both domestically and internationally. The final outcome of the future tax consequences of these examinations and legal proceedings, as well as, the outcome of competent authority proceedings, changes and interpretation in regulatory tax laws, or expiration of statute of limitations could impact the Company's financial statements. Accordingly, the Company has tax reserves recorded for which it is reasonably possible that the amount of the unrecognized tax benefit will increase or decrease which could have a material effect on the financial results for any particular fiscal quarter or year. However, based on the uncertainties associated with litigation and the status of examinations, including the protocols of finalizing audits by the relevant tax authorities which could include formal legal proceedings, it is not possible to estimate the impact of any such change.