
	Income Taxes

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 set forth below:



	Three Months Ended						Six Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
	(millions)
Provision for income taxes at the U.S. federal statutory rate	$	101		$	120		$	194		$	219
Increase (decrease) due to:
State and local income taxes, net of federal benefit	8			8			14			15
Foreign income taxed at different rates, net of U.S. foreign tax	(28		)	(19		)	(44		)	(35		)
Unrecognized tax benefits and settlements of tax examinations	2			18			3			18
Other	—			1			—			2
Total provision for income taxes	$	83		$	128		$	167		$	219

The Company's effective tax rate was lower than the statutory rate during the three-month and six-month periods ended September 28, 2013, principally as a result of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S., as well as an income tax benefit resulting from the restructuring of certain of the Company's foreign operations in Fiscal 2014.

Uncertain Income Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for the three-month and six-month periods ended September 28, 2013 and September 29, 2012 is presented below:



	Three Months Ended						Six Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
	(millions)
Unrecognized tax benefits beginning balance	$	101		$	126		$	100		$	129
Additions related to current period tax positions	1			1			2			2
Additions related to prior period tax positions	—			2			1			2
Reductions related to prior period tax positions	—			(1		)	(2		)	(2		)
Reductions related to settlements with taxing authorities	(1		)	—			(1		)	—
Changes related to foreign currency translation	1			2			2			(1		)
Unrecognized tax benefits ending balance	$	102		$	130		$	102		$	130

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 the three-month and six-month periods ended September 28, 2013 and September 29, 2012 is presented below:



	Three Months Ended					Six Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012
	(millions)
Accrued interest and penalties beginning balance	$	50	$	38		$	50		$	39
Net additions charged to expense	2		19		^(a)	3			20			^(a)
Reductions related to prior period tax positions	—		—			(1		)	(2		)
Changes related to foreign currency translation	1		—			1			—
Accrued interest and penalties ending balance	$	53	$	57		$	53		$	57

^(a) Includes a reserve of $17 million for an interest assessment on a prior year withholding tax. No underlying tax exposure exists. The interest assessed was not material to the Company's consolidated financial statements in any period.

The total amount of unrecognized tax benefits, including interest and penalties, was $155 million and $150 million as of September 28, 2013 and March 30, 2013, respectively, and is 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 $121 million and $115 million as of September 28, 2013 and March 30, 2013, respectively.

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 tax audits and assessments and the expiration of applicable statutes of limitations. The Company is currently in discussions with certain tax jurisdictions with regard to specific ongoing tax audits. The successful resolution of such audits could cause the Company's balance of gross unrecognized tax benefits, excluding interest and penalties, to change significantly during the next twelve months. However, the resolution and potential outcome of these ongoing tax audits is highly uncertain, and as such, an estimate of the range of the reasonably possible change cannot be made at this time.

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