Income Taxes

12 Months Ended

Apr. 02, 2011

Income Taxes [Abstract]

Income Taxes

13.   Income Taxes

Taxes on Income

Domestic and foreign pretax income are as follows:

	Fiscal Years Ended
	April 2,		April 3,		March 28,
	2011		2010		2009
			(millions)
Domestic	$	578.4	$	448.3	$	351.1
Foreign		247.0		241.0		236.4
Total income before provision for income taxes	$	825.4	$	689.3	$	587.5

Provisions (benefits) for current and deferred income taxes are as follows:

	Fiscal Years Ended
	April 2,			April 3,			March 28,
	2011			2010			2009
				(millions)
Current:
Federal(a)	$	126.1		$	138.0		$	126.6
State and local(a)		44.4			16.3			25.6
Foreign		40.0			55.7			64.4
		210.5			210.0			216.6
Deferred:
Federal		55.3			12.0			(15.3	)
State and local		0.2			(1.4	)		(7.4	)
Foreign		(8.2	)		(10.8	)		(12.4	)
		47.3			(0.2	)		(35.1	)
Total provision for income taxes	$	257.8		$	209.8		$	181.5

^(a) Excludes federal, state and local tax benefits of approximately $43 million in Fiscal 2011, $25 million in Fiscal 2010 and $12 million in Fiscal 2009 resulting from stock-based compensation arrangements. Such amounts were recorded within equity.

Tax Rate Reconciliation

The differences between income taxes expected at the U.S. federal statutory income tax rate of 35% and income taxes provided are as set forth below:

	Fiscal Years Ended
	April 2,			April 3,			March 28,
	2011			2010			2009
				(millions)
Provision for income taxes at the U.S. federal statutory rate	$	288.9		$	241.3		$	205.6
Increase (decrease) due to:
State and local income taxes, net of federal benefit		29.9			5.7			11.9
Foreign income taxed at different rates, net of U.S. foreign tax credits		(63.5	)		(45.6	)		(40.1	)
Other		2.5			8.4			4.1
Total provision for income taxes	$	257.8		$	209.8		$	181.5

The Company’s effective tax rate is lower than the statutory rate principally as a result of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S., as well as reductions in tax reserves associated with conclusions of tax examinations and other discrete tax reserve reductions.

Deferred Taxes

Significant components of the Company’s net deferred tax assets (liabilities) are as follows:

	April 2,			April 3,
	2011			2010
	(millions)
Current deferred tax assets:
Receivable allowances and reserves	$	39.4		$	49.6
Inventory basis difference		26.7			23.8
Other		23.4			27.2
Net operating losses and other tax attributed carryforwards		0.3			—
Valuation allowance		(0.5	)		—
Net current deferred tax assets(a)		89.3			100.6
Non-current deferred tax assets (liabilities):
Property, plant and equipment		33.8			71.1
Goodwill and other intangible assets		(203.6	)		(169.2	)
Net operating losses carryforwards		30.0			30.2
Cumulative translation adjustment and hedges		3.8			1.1
Deferred compensation		60.2			55.0
Deferred income		40.4			48.3
Unrecognized tax benefits		45.6			26.4
Transfer pricing		25.3			—
Other		23.2			29.3
Valuation allowance		(23.4	)		(20.8	)
Net non-current deferred tax assets(b)		35.3			71.4
Net deferred tax assets	$	124.6		$	172.0

(a)	Net current deferred tax balances as of April 2, 2011 and April 3, 2010 included current deferred tax liabilities of $2.8 million and $2.4 million, respectively, recorded within accrued expenses and other in the consolidated balance sheets.
(b)	Net non-current deferred tax balances as of April 2, 2011 and April 3, 2010 were comprised of non-current deferred tax assets of $76.7 million and $101.9 million, respectively, included within deferred tax assets, and non-current deferred tax liabilities of $41.4 million and $30.5 million, respectively, recorded within other non-current liabilities in the consolidated balance sheets.

The Company has available state and foreign net operating loss carryforwards of $5.0 million and $43.7 million, respectively, for tax purposes to offset future taxable income. The net operating loss carryforwards expire beginning in Fiscal 2012.

Also, the Company has available state and foreign net operating loss carryforwards of $7.8 million and $67.9 million, respectively, for which no net deferred tax asset has been recognized. A full valuation allowance has been recorded since management does not believe that the Company will more likely than not be able to utilize these carryforwards to offset future taxable income. Subsequent recognition of these deferred tax assets would result in an income tax benefit in the year of such recognition. The valuation allowance relating to state and foreign net operating tax carryforwards increased $3.6 million and $1.9 million, respectively, as a result of the Company’s inability to utilize certain state and foreign net operating tax carryforwards.

Provision has not been made for U.S. or additional foreign taxes on $1.182 billion of undistributed earnings of foreign subsidiaries. Those earnings have been and are expected to continue to be reinvested. These earnings could become subject to tax if they were remitted as dividends, if foreign earnings were lent to PRLC, a subsidiary or a U.S. affiliate of PRLC, or if the stock of the subsidiaries were sold. Determination of the amount of unrecognized deferred tax liability with respect to such earnings is not practical. Management believes that the amount of the additional taxes that might be payable on the earnings of foreign subsidiaries, if remitted, would be partially offset by U.S. foreign tax credits.

Uncertain Income Tax Benefits

Fiscal 2011, Fiscal 2010 and Fiscal 2009 Activity

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for Fiscal 2011, Fiscal 2010 and Fiscal 2009 is presented below:

	Fiscal Years Ended
	April 2,			April 3,			March 28,
	2011			2010			2009
	(millions)
Unrecognized tax benefits beginning balance	$	96.2		$	113.7		$	117.5
Additions related to current period tax positions		2.2			6.1			5.4
Additions related to prior period tax positions		45.6			5.1			19.4
Reductions related to prior period tax positions		(18.0	)		(13.4	)		(17.8	)
Reductions related to expiration of statutes of limitations		(1.4	)		—			—
Reductions related to settlements with taxing authorities		(2.4	)		(15.5	)		(5.8	)
Additions (reductions) charged to foreign currency translation		2.8			0.2			(5.0	)
Unrecognized tax benefits ending balance	$	125.0		$	96.2		$	113.7

The Company classifies interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. A reconciliation of the beginning and ending amounts of accrued interest and penalties related to unrecognized tax benefits for Fiscal 2011, Fiscal 2010 and Fiscal 2009 is presented below:

	Fiscal Years Ended
	April 2,		April 3,			March 28,
	2011		2010			2009
	(millions)
Accrued interest and penalties beginning balance	$	29.8	$	41.1		$	48.0
Additions (reductions) charged to expense		1.2		(3.3	)		(0.8	)
Reductions related to settlements with taxing authorities		—		(8.0	)		(5.1	)
Additions (reductions) charged to foreign currency translation		0.4		—			(1.0	)
Accrued interest and penalties ending balance	$	31.4	$	29.8		$	41.1

The total amount of unrecognized tax benefits, including interest and penalties, was $156.4 million as of April 2, 2011 and $126.0 million as of April 3, 2010 and was included within non-current liability for unrecognized tax benefits in the consolidated balance sheets. The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $110.8 million as of April 2, 2011 and $99.6 million as of April 3, 2010.

Future Changes in Unrecognized Tax Benefits

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next 12 months. However, changes in the occurrence, expected outcomes and timing of those events could cause the Company’s current estimate to change materially in the future.

The Company files tax returns in the U.S. federal and various state, local and foreign jurisdictions. With few exceptions for those tax returns, the Company is no longer subject to examinations by the relevant tax authorities for years prior to Fiscal 2004.