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Income Taxes
9 Months Ended
Jul. 26, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Applied’s effective tax rates for the third quarters of fiscal 2015 and 2014 were 12.3 percent and 18.6 percent, respectively. The effective tax rate for the third 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 and changes in the geographical composition of income.
Applied's effective tax rates for the first nine months of fiscal 2015 and 2014 were 13.3 percent and 22.3 percent, respectively. The effective tax rate for the first nine months of fiscal 2015 was lower than in the same period in the prior year primarily due to an adjustment in the second quarter of fiscal 2015 to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales, 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, 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, resolutions and changes related to income tax liabilities for prior years, and changes in the geographical composition of income.

The effective tax rate for the nine months ended July 26, 2015 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 nine months ended July 26, 2015 was a decrease in provision for income taxes of $35 million. See Note 1 of Notes to Consolidated Condensed Financial Statements.