Note F. Income Taxes

9 Months Ended

Oct. 01, 2011

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The Company provided for income taxes on an interim basis based upon the estimated annual effective tax rate for 2011 and 2010.  The following reconciles the federal statutory income tax rate to the effective tax rate of approximately 29.4% and 72.0% for the first nine months of 2011 and 2010, respectively:

	For the first nine months of
	2011		2010
Income tax at the federal statutory rate	35.0	%	35.0	%
Net change from federal statutory rate:
Tax benefit from capitalized research and development costs	—		95.8
Increase in valuation allowance related to deferred tax assets	(8.6	)	(53.3	)
(Increase) decrease in uncertain tax positions, including interest	(0.5	)	9.9
State income tax benefit, net of federal income tax effect	4.8		(2.2	)
Tax effect resulting from foreign activities	(0.4	)	(10.8	)
Non-deductible expenses	(0.8	)	(1.2	)
Other, net	(0.1	)	(1.2	)
Income tax at effective rate	29.4	%	72.0	%

The increase in valuation allowance relates to losses of certain foreign subsidiaries and losses in certain domestic jurisdictions. The Company has determined that based on the history of losses at these subsidiaries, a valuation allowance is required for these loss carry-forwards since it is more likely than not that these loss carry-forwards will not be realized.

As of January 1, 2011, the Company had a liability of approximately $21.2 million for unrecognized tax benefits related to various federal, foreign and state income tax matters.  As a result of additional provisions to the reserve during the first nine months of 2011, the liability for uncertain tax positions at October 1, 2011 was approximately $23.3 million. The liability for uncertain tax positions is included in other long-term liabilities on the accompanying unaudited condensed consolidated balance sheet. The corresponding amount of gross uncertain tax benefits was approximately $24.3 million and $21.9 million at October 1, 2011 and December 31, 2010, respectively.

The amount of uncertain tax positions that will impact the Company's effective tax rate is approximately $13.0 million. The difference between the total amount of uncertain tax positions and the amount that will impact the effective tax rate represents the federal tax effect of state tax items and items that offset temporary differences.

As of October 1, 2011, the Company had approximately $1.7 million in unrecognized benefits relating to various state tax issues, for which the statute of limitations is expected to expire in the fourth quarter of 2011.

As of December 31, 2010, the Company had accrued liabilities of approximately $3.0 million for interest related to uncertain tax positions.  As of October 1, 2011, the total amount of accrued interest related to uncertain tax positions was approximately $4.0 million.  The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state taxes.