INCOME TAXES

12 Months Ended

Jan. 01, 2012

INCOME TAXES

INCOME TAXES

NOTE 17. INCOME TAXES

        Income (loss) before provision (benefit) for income taxes consisted of the following (in millions):

	Year Ended
	January 1, 2012			January 2, 2011			January 3, 2010
United States	$	(19.2	)	$	(61.1	)	$	(75.0	)
Non-United States		214.8			311.3			18.0
Total	$	195.6		$	250.2		$	(57.0	)

        The components of the provision (benefit) for income taxes are as follows (in millions):

	Year Ended
	January 1, 2012			January 2, 2011			January 3, 2010
Current:
Federal	$	0.4		$	—		$	—
State		—			—			—
Foreign		62.8			106.4			7.4
Total current		63.2		$	106.4			7.4
Deferred:
Federal		—			3.9			—
State		0.1			0.3			—
Foreign		(3.4	)		(7.0	)		(0.5	)
Total deferred		(3.3	)		(2.8	)		(0.5	)
Provision (benefit) for income taxes	$	59.9		$	103.6		$	6.9

        For the years ended January 1, 2012 and January 2, 2011, the components of deferred income tax assets (liabilities) were as follows (in millions):

	Year Ended
	January 1, 2012									January 2, 2011
	Federal			State			Foreign			Federal			State			Foreign
Current:
Uniform capitalization	$	0.2		$	—		$	—		$	0.1		$	—		$	—
Sales discount reserve		0.5			0.1			—			0.6			—			—
Bad debt reserve		0.5			0.1			1.0			0.3			—			1.1
Inventory reserve		2.9			0.3			2.5			3.6			0.3			2.2
Warranty reserve		1.0			0.1			1.4			0.5			—			5.5
Legal Reserves		8.1			0.8			0.1			7.7			0.5			—
Restructuring reserve		—			—			—			0.2			—			—
Other		1.7			0.2			(2.1	)		0.5			0.1			0.2
Subtotal		14.9			1.6			2.9			13.5			0.9			9.0
Valuation allowance		(14.9	)		(1.6	)		(0.4	)		(13.5	)		(0.9	)		(0.3	)
Total current		—			—			2.5			—			—			8.7
Non-current:
NOL		100.2			7.8			11.2			109.0			7.4			24.2
Intangible assets		(1.8	)		1.1			(0.5	)		(2.2	)		0.9			(1.2	)
Fixed assets		0.4			0.1			(1.1	)		(0.1	)		—			(1.9	)
Other		3.9			1.3			7.3			3.3			1.2			0.6
Subtotal		102.7			10.3			16.9			110.0			9.5			21.7
Valuation allowance		(106.5	)		(10.7	)		(3.6	)		(113.9	)		(9.8	)		(16.9	)
Total non-current		(3.8	)		(0.4	)		13.3			(3.9	)		(0.3	)		4.8
Net deferred income tax assets (liabilities)	$	(3.8	)	$	(0.4	)	$	15.8		$	(3.9	)	$	(0.3	)	$	13.5

        The Company had total deferred tax assets of $154.8 million and $171.4 million and total deferred tax liabilities of $5.5 million and $6.8 million at January 1, 2012 and January 2, 2011, respectively.

        The Company records a valuation allowance against its deferred income tax assets when, in management's judgment, the deferred income tax assets will not more likely than not be realized. For the years ended January 1, 2012, January 2, 2011 and January 3, 2010, the net increase (decrease) in valuation allowances against deferred income tax assets was $(21.1) million, $17.9 million and $(2.7) million, respectively.

        A reconciliation of the Company's provision (benefit) for income taxes to the U.S. federal statutory rate is as follows (in millions):

	Year Ended
	January 1, 2012						January 2, 2011						January 3, 2010
	Amount			%			Amount			%			Amount			%
Provision for income taxes at statutory rate	$	68.5			35	%	$	87.6			35	%	$	(20.0	)		(35	)%
State taxes, net of federal benefit		0.1			—			0.2			—			0.2			—
Foreign income taxed at different rates		(10.6	)		(5	)		(9.6	)		(4	)		0.6			1
Deemed foreign dividends		12.4			6			13.1			5			—			—
Liquidation of subsidiaries		(5.2	)		(2	)
Non-deductible goodwill		—			—			—			—			16.1			28
Other		0.9			0			4.5			2			0.7			2
Valuation allowance		(6.2	)		(3	)		7.8			3			9.3			16
	$	59.9			31	%	$	103.6			41	%	$	6.9			12	%

        As of January 1, 2012, the Company had NOL carry-forwards for federal and state income tax purposes of approximately $295.8 million and $93.5 million, respectively. These operating loss carry-forwards expire in various years beginning in 2022 and 2012, respectively. The Company also has foreign NOLs in various countries totaling approximately $50.3 million.

        Pursuant to Sections 382 and 383 of the US Internal Revenue Code, the utilization of domestic NOL carry-forwards and other tax attributes may be subject to limitations if certain ownership changes occur during a three-year testing period.

        At January 1, 2012, the Company's liability for uncertain tax positions was $6.6 million which was recorded in other assets. At January 2, 2011, the Company's liability for uncertain tax positions was $9.2 million of which $7.0 million was recorded in other assets, $1.9 million was recorded in other accrued expense, and $0.3 million was recorded in other long-term liabilities. At January 3, 2010, the Company's liability for uncertain tax positions was $3.8 million which was recorded in other long term liabilities. The Company recognized a decrease of approximately $2.6 million during 2011 in liability for unrecognized tax benefits, including interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 28, 2008	$	1.8
Gross increases—tax positions in prior periods		2.8
Gross decreases—tax positions in prior periods		(1.2	)
Balance at January 3, 2010		3.4
Gross increases—tax positions in prior periods		8.7
Gross decreases—tax positions in prior periods		(3.2	)
Balance at January 2, 2011		8.9
Gross decreases—tax positions in prior periods		(0.5	)
Gross decreases—settlements with tax authorities		(1.8	)
Balance at January 1, 2012	$	6.6

        The Company's unrecognized tax positions would not impact the effective tax rate if recognized.

        The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The liability related to unrecognized tax benefits did not include accrued interest or penalties as of January 1, 2012. The liability related to unrecognized tax benefits included accrued interest and penalties of approximately $0.2 million and $0.1 million, respectively, as of January 2, 2011. Interest included in income tax provision in the Company's consolidated statement of operations was less than $0.1 million for the years ended January 1, 2012, January 2, 2011, and January 3, 2010. No penalties were recorded to the income tax provision for the years ended January 1, 2012, January 2, 2011, and January 3, 2010.

        The Company is currently under audit by several tax authorities. Based on the expected timing of the resolution or closure of these audits, the Company does not anticipate that the issues related to the Company's unrecognized tax benefits for positions existing at January 1, 2012 will be resolved during the fiscal year ending December 30, 2012.

        As of January 1, 2012, US income taxes have not been provided on approximately $270 million of undistributed earnings of foreign subsidiaries since the Company considers these earnings to be reinvested indefinitely. Determination of the amount of unrecognized deferred tax liabilities for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable.

        The Company is subject to federal income tax as well as income taxes in many state and foreign jurisdictions. The federal statute of limitations on assessment remains open for the tax years 2008 through 2010, and the statutes of limitation in state jurisdictions remain open in general from tax years 2007 through 2010. The major foreign jurisdictions remain open for examination in general for tax years 2001 through 2010. The Company anticipates that some of these audits may be finalized in the foreseeable future. However, based upon the complexity of the positions and the protocol for finalizing audits by the relevant tax authorities, the Company cannot reasonably estimate the range of increases and decreases in the next 12 months.