Taxes Based on Income

9 Months Ended

Oct. 03, 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						Nine Months Ended
(Dollars in millions)	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Income from continuing operations before taxes	$	116.1		$	99.1		$	317.4		$	263.0
Provision for income taxes	34.8			38.2			99.5			85.5

Effective tax rate	30.0		%	38.5		%	31.3		%	32.5		%

The effective tax rate for continuing operations for the three and nine months ended October 3, 2015 included $4.2 million of tax benefit resulting from return to provision adjustments pursuant to the completion of the 2014 U.S. federal tax return and $.9 million of tax benefit from a favorable foreign tax law change. Additionally, the effective tax rate for the nine months ended October 3, 2015 included $1.6 million of net tax benefit related to changes in the effective tax rates in certain foreign municipalities; $4.2 million of tax benefit due to decreases in certain tax reserves as a result of closing tax years; and $5.4 million of tax expense associated with the tax cost to repatriate non-permanently reinvested 2015 earnings of certain foreign subsidiaries.

The effective tax rate for continuing operations for the three and nine months ended September 27, 2014 included $4.2 million and $20 million of tax benefit as a result of changes in certain tax reserves and valuation allowances, respectively; and $4.6 million of tax expense from the taxable inclusion of a net foreign currency gain related to the revaluation of certain intercompany loans. Additionally, the effective tax rate for the nine months ended September 27, 2014 included $6 million of tax expense related to our change in estimate of the potential outcome of uncertain tax issues in China.

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 $15 million, primarily as a result of closing tax years.