XML 85 R20.htm IDEA: XBRL DOCUMENT v2.4.1.9
Income Taxes
6 Months Ended
Apr. 26, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Applied’s effective tax rates for the second quarters of fiscal 2015 and 2014 were 6.4 percent and 28.2 percent, respectively. The effective tax rate for the second quarter of fiscal 2015 was lower than in the same period in the prior year primarily due to resolutions and changes related to income tax liabilities for prior years, acquisition costs that became deductible in the second quarter of fiscal 2015 as a result of the termination of the proposed business combination with TEL, and changes in the geographical composition of income.
Applied's effective tax rates for the first six months of fiscal 2015 and 2014 were 13.8 percent and 24.3 percent, respectively. The effective tax rate for the first half of fiscal 2015 was lower than in the same period in the prior year primarily due to resolutions and changes related to income tax liabilities for prior years, reinstatement of the U.S. federal research and development tax credit during the first quarter of fiscal 2015 which was retroactive to its expiration in December 2013, acquisition costs that became deductible in the second quarter of fiscal 2015 as a result of the termination of the proposed business combination with TEL and changes in the geographical composition of income.

The effective tax rate for the three and six months ended April 26, 2015 also includes the effect of an adjustment primarily to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales. While this error had no impact on Applied’s consolidated cost of sales, it resulted in overstating profitability in the U.S. and the provision for income taxes, income taxes payable and other tax balance sheet accounts in each year since fiscal 2010. The impact of the adjustment to the three months and six months ended April 26, 2015 was a decrease in provision for income taxes of $39 million and $35 million, respectively. See Note 1 of Notes to Condensed Consolidated Financial Statements.