Provision for Income Taxes

6 Months Ended

Jul. 03, 2011

Provision for Income Taxes [Abstract]

Provision for Income Taxes

10. Provision for Income Taxes

     The following table presents the provision for income taxes and the effective tax rate for the three and six months ended July 3, 2011 and July 4, 2010.

	Three months ended						Six months ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
	(In thousands, except percentages)
Provision for income taxes	$	116,353		$	100,881		$	223,157		$	189,184
Effective tax rate		31.9	%		28.1	%		32.1	%		27.7	%

     The provision for income taxes for the six months ended July 3, 2011 differs from the U.S. statutory tax rate primarily due to the tax impact of earnings from foreign operations, state taxes, tax-exempt interest income and the benefit from federal and California R&D credits. The Company’s earnings and taxes resulting from foreign operations are largely attributable to the Company’s Irish, Chinese, Israeli and Japanese entities. The provision for income taxes for the six months ended July 4, 2010 is lower compared to the same period in fiscal year 2011 due to the inclusion of benefits from release of the U.S. valuation allowance. As of July 3, 2011, the Company believes that most of its deferred tax assets are more likely than not to be realized, except for loss carry forwards in certain U.S. and foreign tax jurisdictions.

     Unrecognized tax benefits were $175.3 million and $172.1 million as of July 3, 2011 and January 2, 2011, respectively. Unrecognized tax benefits that would impact the effective tax rate in the future was approximately $72.9 million at July 3, 2011. Interest and penalties included in income tax expense for the three and six months ended July 3, 2011 was $0.7 million and $1.3 million, respectively.

     The Company is subject to U.S. federal income tax as well as income taxes in multiple state and foreign jurisdictions. In October 2009, the Internal Revenue Service commenced an examination of the Company’s federal income tax returns for fiscal years 2005 through 2008. The Company does not expect a complete resolution to be reached during the next twelve months. In addition, the Company is currently under audit by various state and international tax authorities. The Company cannot reasonably estimate the outcome of these examinations, or provide assurance that the outcome of these examinations will not have a material effect on its financial position, results of operations or liquidity.

     The Company provides for U.S. income taxes on the earnings of foreign subsidiaries unless the earnings are considered indefinitely invested outside of the U.S. As of January 2, 2011, no provision had been made for U.S. income taxes or foreign withholding taxes on $195.4 million of undistributed earnings of foreign subsidiaries since the Company intends to indefinitely reinvest these earnings outside the U.S. The Company determined that the calculation of the amount of unrecognized deferred tax liability related to these cumulative unremitted earnings was not practicable. If these earnings were distributed to the U.S., the Company would be subject to additional U.S. income taxes and foreign withholding taxes reduced by available foreign tax credits.