Income Taxes

Our effective tax rate (income taxes as a percentage of income from continuing operations before income taxes) was 29.6 percent in the quarter ended March 31, 2017 compared with 28.1 percent in the quarter ended April 1, 2016. In the quarter ended March 31, 2017, our effective tax rate benefited from the net favorable impact of:


•	The adoption of the accounting standard issued by the FASB that changed the accounting for certain aspects of stock options and other share based-compensation, as discussed in Note A — Significant Accounting Policies and Recent Accounting Standards in these Notes, and by several differences in GAAP and tax accounting related to investments; and


•	Additional deductions and additional research credits claimed on our fiscal 2016 tax return compared with our recorded estimates at the end of fiscal 2016; partially offset by


•	Our recognition of certain tax expenses following our classification of CapRock and IT Services as discontinued operations, as discussed in Note B — Discontinued Operations in these Notes.

In the quarter ended April 1, 2016, our effective tax rate benefited from the favorable impact of:


•	Amounts recorded in respect of the expected near-term recognition of a tax loss for the divestiture of our composite aerostructures business (“Aerostructures”), net of valuation allowance, following our classification of Aerostructrues as held for sale as of the end of the quarter ended April 1, 2016;


•	Additional deductions and additional research credits claimed on our fiscal 2015 tax return compared with our recorded estimates at the end of fiscal 2015; and


•	State tax reductions resulting from our integration of Exelis operations.

Our effective tax rate was 29.7 percent in the three quarters ended March 31, 2017 compared with 29.7 percent in the three quarters ended April 1, 2016. In the three quarters ended March 31, 2017, our effective tax rate was impacted by the discrete items noted above favorably impacting the quarter ended March 31, 2017.

In the three quarters ended April 1, 2016, our effective tax rate benefited from:


•	The discrete items noted above favorably impacting the quarter ended April 1, 2016;


•	The effect of legislation enacted in the quarter ended January 1, 2016 that restored the U.S. Federal income tax credit for qualifying research and development (“R&D”) expenses for calendar year 2015 and made the credit permanent for the periods following December 31, 2015;


•	The settlement of a state tax issue for an amount lower than the previously recorded estimate; and


•	Several differences between GAAP and tax accounting for investments.