Income Taxes - Note 11

9 Months Ended

Oct. 02, 2011

Income Taxes [Abstract]

Income Taxes Disclosure

11. Income Taxes

On a quarterly basis, the Company evaluates its expected income tax expense or benefit based on its year-to-date operations, and records an adjustment in the current quarter. The net tax provision (benefit) is the result of the mix of profits earned by the Company and its subsidiaries in tax jurisdictions with a broad range of income tax rates. For the nine months ended October 2, 2011 and September 26, 2010, the Company recorded a $0.2 million and a $0.3 million provision for income taxes, respectively. The provision for income taxes primarily consists of provisions or benefits from foreign taxes. The $0.2 million tax expense for the nine months ended October 2, 2011 includes a $0.4 million tax benefit related to the release of uncertain tax benefits due to a lapse of the statute of limitations, offset by a tax provision of $0.6 million.

As of December 31, 2010, the Company had $27.1 million of unrecognized tax benefits exclusive of interest and penalties described below. Included in the $27.1 million are approximately $3.0 million of unrecognized tax benefits (net of federal benefit) that, if recognized, would favorably affect the effective tax rate in a future period, before consideration of changes in the valuation allowance. The Company believes that it is reasonably possible that there will be a decrease of $1.7 million in its unrecognized tax benefits exclusive of interest and penalties within the next twelve months.

The Company's practice is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2010, the Company had $1.2 million accrued for estimated interest and $0.1 million accrued for estimated penalties. For the nine months ended October 2, 2011, the recorded income tax provision included estimated interest of $0.2 million.

The Company and its subsidiaries are subject to United States federal income tax as well as to income taxes in various foreign and state jurisdictions. For federal and state income tax purposes, the statute of limitations are closed for all years prior to 2006 with the exception of 2004. The Company had no tax audits in progress as of October 2, 2011.