Income taxes

6 Months Ended

Jul. 01, 2011

Income taxes [Abstract]

Income taxes

(5) Income taxes

At July 1, 2011, we had approximately $12.8 million of unrecognized tax benefits, $6.2 million of which are classified as other long-term liabilities and are not expected to be realized within the next 12 months.  All of these tax benefits would affect our effective tax rate, if recognized.

We recognize interest and penalties, if any, related to income tax matters as income tax expense.  As of July 1, 2011, we have $0.2 million accrued for interest and/or penalties related to uncertain income tax positions.  The amount accrued for interest and/or penalties decreased approximately $0.9 million from the year ended December 31, 2010 as a result of the release of a non-U.S. tax reserve during the six months ended July 1, 2011.  The release of the reserve and related accrued interest and/or penalties was due to the dissolution of a non-U.S. legal entity which we no longer operate.

We are subject to U.S. federal income tax as well as income tax in multiple state and non-U.S. jurisdictions.  Federal and state income tax returns for all years after 2006 are subject to future examination by the respective tax authorities.  With respect to material non-U.S. jurisdictions where we operate, we have open tax years ranging from two to 10 years.

The effective tax rate for the six months ended July 1, 2011 was a benefit of 38.2% compared to a benefit of 0.4% for the six months ended June 25, 2010.  The increase in the effective tax benefit was due to the absence of the goodwill impairment charges that reduced the 2010 tax benefit and the release of a non-U.S. tax reserve in 2011. These increases to the tax benefit were partially offset by restructuring charges incurred in lower tax rate jurisdictions during the six months ended July 1, 2011.

During the three months ended July 1, 2011, we paid $1.9 million related to an audit of one of our foreign subsidiaries' income tax filings. Settlement of this matter may result in additional payments of as much as $4.4 million.  This amount has been fully accrued for as of July 1, 2011, however, we do not anticipate additional payments related to this matter until 2012.