Taxes Based on Income

6 Months Ended

Jul. 04, 2015

Note 11. Taxes Based on Income

The following table summarizes our income from continuing operations before taxes, provision for income taxes from continuing operations, and effective tax rate:

	Three Months Ended							Six Months Ended
(In millions)	July 4, 2015			June 28, 2014				July 4, 2015			June 28, 2014
Income from continuing operations before taxes	$	100.8		$		77.1		$	200.3		$	164.9
Provision for income taxes	36.5			32.7				64.4			48.9

Effective tax rate		36.2	%		42.4		%		32.2	%		29.7	%

The effective tax rate for continuing operations for the three and six months ended July 4, 2015 included $5.3 million of tax expense associated with the tax cost to repatriate non-permanently reinvested 2015 earnings of certain foreign subsidiaries; $.5 million of tax expense due to non-deductible employee-related expenses; and $.7 million and $4.1 million of tax benefits, respectively, due to decreases in certain tax reserves as a result of closing tax years. Additionally, the effective tax rate for the six months ended July 4, 2015 included $1.6 million of net tax benefit related to changes in the effective tax rates in certain foreign municipalities.

The effective tax rate for continuing operations for the three and six months ended June 28, 2014 included $5.8 million of net tax expense and $3.7 million of net tax benefit, respectively, as a result of changes in certain tax reserves and valuation allowances. Both the three and six months ended June 28, 2014 included $6.1 million of tax expense from an out-of-period adjustment to properly reflect the valuation allowance related to state deferred tax assets and $6 million of tax expense related to our change in estimate of the potential outcome of uncertain tax issues in China. These expense items were offset by $6.3 million and $15.8 million of tax benefits in the three and six months ended June 28, 2014, respectively, due primarily to decreases in certain tax reserves as a result of closing tax years. Additionally, the effective tax rate for the six months ended June 28, 2014 included $4.8 million of tax benefit from out-of-period adjustments to properly reflect deferred taxes related to acquisitions completed in 2002 and 2003. The impact of the out-of-period adjustments was not material to the periods reported and any previous financial statements.

The amount of income taxes we pay is subject to ongoing audits by taxing jurisdictions around the world. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. We believe that we have adequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate. With some exceptions, we and our subsidiaries are no longer subject to income tax examinations by tax authorities for years prior to 2006.

It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions, including interest and penalties, of approximately $11 million, primarily as a result of closing tax years.