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Income Taxes
9 Months Ended
Jan. 25, 2014
Income Taxes

(10) Income Taxes

The Company recorded an income tax provision of $47,725 on a pre-tax income of $110,955 during the 13 weeks ended January 25, 2014, which represented an effective income tax rate of 43.0%. The Company recorded a $(1,432) tax benefit on pre-tax loss of $(5,115) during the 13 weeks ended January 26, 2013, which represented an effective income tax rate of 28.0%.

The Company recorded an income tax provision of $64,453 on a pre-tax income of $53,889 during the 39 weeks ended January 25, 2014, which represented an effective income tax rate of 119.6%. The Company recorded a $(22,524) tax benefit on pre-tax loss of $(65,534) during the 39 weeks ended January 26, 2013, which represented an effective income tax rate of 34.4%.

 

The income tax provisions for the 13 and 39 weeks ended January 25, 2014 do not include income tax benefits on losses incurred by certain domestic operations because the Company recorded valuation allowances against the associated deferred assets. During the 13 weeks ended January 25, 2014, the Company recorded an additional valuation allowance against certain deferred tax assets as a result of decisions made regarding the Company’s future device strategy in international markets. The impact of this item on the 13 weeks ended January 25, 2014 income tax provision was an increase of $44,245. The income tax provision is principally comprised of the result of the activities of profitable jurisdictions and valuation allowances against certain deferred assets at January 25, 2014. The Company’s pre-tax income in profitable jurisdictions, where it records tax provisions, was lower than domestic losses where it maintains valuation allowances and does not record tax benefits. The balance sheet presentation of certain tax payable and other items as at January 26, 2013 has been adjusted to conform with the appropriate presentation which is reflected at April 27, 2013.

As of January 25, 2014, the Company had $26,898 of unrecognized tax benefits, all of which, if recognized, would affect the Company’s effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had $10,394 accrued for interest and penalties, which is included in the $26,898 of unrecognized tax benefits noted above. Further, we believe that it is reasonably possible that the total amount of unrecognized tax benefits at January 25, 2014 could decrease by approximately $10,376 within the next twelve months, as a result of settlement of certain tax audits or lapses of statutes of limitation. Such decreases may involve the payment of additional taxes, the adjustment of deferred taxes including the need for additional valuation allowances, and the recognition of tax benefits.

The Company is subject to U.S. federal income tax as well as income tax in jurisdictions of each state having an income tax. The Company’s income tax returns are subject to ongoing tax examinations in several jurisdictions in which it operates. The tax years that remain subject to examination are primarily 2007 and forward. Some earlier years remain open for a small minority of states.