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INCOME TAXES
9 Months Ended
Sep. 27, 2013
INCOME TAXES
NOTE 11. INCOME TAXES
In the third quarter of fiscal 2013, the Company’s effective income tax rate was 14% as compared to 19% in the corresponding period in 2012, primarily due to differences in the geographic mix of pretax income and the reinstatement of the federal R&D credit. In the first three quarters of fiscal 2013, the Company’s effective income tax rate was 15% as compared to 18% in the corresponding period in 2012 due to the same reasons mentioned above.
The Company's effective tax rates for the third quarter of fiscal years 2013 and 2012 are lower than the U.S. federal statutory rate of 35% primarily due to the reinstatement of the federal R&D credit in 2013 and favorable tax rates associated with certain earnings from operations in lower-tax jurisdictions. The Company has not provided U.S. taxes for all of such earnings due to the indefinite reinvestment of some of those earnings outside the U.S.
The Company and its subsidiaries are subject to U.S. federal and state, and foreign income tax. The Company is currently in different stages of multiple year examinations by the Internal Revenue Service as well as various state and foreign taxing authorities. Although timing of the resolution of audits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits as of September 27, 2013 will materially change in the next twelve months.
The unrecognized tax benefits of $44.2 million and $35.2 million as of the third quarter of fiscal 2013 and fiscal year end 2012, respectively, if recognized, would favorably affect the effective income tax rate in future periods. Unrecognized tax benefits are recorded in Other non-current liabilities and in the deferred tax accounts in the accompanying Condensed Consolidated Balance Sheets.
The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company's unrecognized tax benefit liabilities include interest and penalties as of the third quarter of fiscal 2013 and fiscal year end 2012, of $3.5 million and $2.9 million, respectively, which were recorded in Other non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.