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Income Taxes
6 Months Ended
Apr. 28, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Applied’s effective income tax rates for the second quarter of fiscal 2013 and fiscal 2012 were tax provisions of 43.3 percent and 25.3 percent, respectively. Applied’s effective income tax rates for the first six months of fiscal 2013 and 2012 were tax provisions of 31.9 percent and 25.6 percent, respectively. The effective tax rate for the second quarter of fiscal 2013 was a provision of 43.3 percent as there was an income tax provision against a loss before income taxes because the goodwill impairment charge was not deductible. The change in the effective income tax rates was also due to an $11 million benefit resulting from the resolution of uncertainties related to Varian during the first quarter of fiscal 2013 and a $13 million benefit from the reinstatement of the U.S. federal research and development tax credit retroactive to January 1, 2012 during the first half of fiscal 2013. The tax rates were further affected by changes in composition of income in jurisdictions outside the U.S., including jurisdictions with tax incentives. Applied’s future effective income tax rate depends on various factors, such as tax legislation and the geographic composition of Applied’s pre-tax income. Management carefully monitors these factors and timely adjusts the interim effective income tax rate accordingly.
The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be made as part of the resolution process, is highly uncertain and could cause an impact to Applied’s consolidated results of operations. This could also cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. Applied does not expect a material change in unrecognized tax benefits in the next 12 months.