XML 72 R19.htm IDEA: XBRL DOCUMENT v2.4.1.9
Income Taxes
6 Months Ended
May 02, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The effective tax rates for the three and six months ended May 2, 2015, differ from tax computed at the U.S. federal statutory tax rate of 35% due to state taxes, the effect of non-U.S. operations, nondeductible stock-based compensation expense, tax credits, and adjustments to unrecognized tax benefits.
The lower effective tax rates for the three and six months ended May 2, 2015, compared with the three and six months ended May 3, 2014, respectively, were primarily due to the goodwill impairment charge of $83.4 million recorded in the three months ended May 3, 2014, which is nondeductible for tax purposes.
The effective tax rates for the three and six months ended May 2, 2015, were lower than the federal statutory tax rate of 35% primarily due to discrete benefits from the federal research and development tax credit that was reinstated in December 2014, and made retroactive for calendar year 2014, and the effects of earnings in foreign jurisdictions being taxed at rates lower than the U.S. federal statutory tax rate.
The total amount of net unrecognized tax benefits of $82.0 million as of May 2, 2015, would affect the Company’s effective tax rate, if recognized. The timing of the closure of audits being conducted by various tax authorities is highly uncertain and it is reasonably possible that the balance of unrecognized tax benefits could change during the remainder of fiscal year 2015.
The IRS and other tax authorities regularly examine the Company’s income tax returns. In October 2014, the IRS issued a Revenue Agent’s Report related to its field examination of the Company’s federal income tax returns for fiscal years 2009 and 2010. The IRS is contesting the Company’s transfer pricing with its foreign subsidiaries. In November 2014, the Company filed a protest to challenge the proposed adjustment, and in March 2015, the issue was moved to the Office of Appeals. In addition, in October 2014, the Geneva Tax Administration issued its final assessments for fiscal years 2003 to 2012, disputing certain of the Company’s transfer pricing arrangements. In November 2014, the Company filed a protest to challenge the final assessments. The Company believes that reserves for unrecognized tax benefits are adequate for all open tax years. The timing of income tax examinations, as well as the amounts and timing of related settlements, if any, are highly uncertain. Before the end of fiscal year 2015, it is reasonably possible that either certain audits will conclude or the statute of limitations relating to certain income tax examination periods will expire, or both. Taking into consideration the inherent uncertainty as to settlement terms, the timing of payments, and the impact of such settlements on other uncertain tax positions, the Company estimates the range of potential decreases in underlying uncertain tax positions is between $0 million and $4 million in the next 12 months.