Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

Income Taxes

11. Income Taxes

Provision for income taxes includes both domestic and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Income tax expense was $2.8 million and $7.7 million for the three months ended March 31, 2012 and April 2, 2011, respectively, resulting in effective tax rates of 16.3% and 134.3%, respectively. The effective tax rate for the three months ended March 31, 2012 decreased from the prior period, primarily due to the prior period tax charge related to the intercompany license of certain technology and other one-time nondeductible costs associated with the acquisition of Spectra Linear in 2011, along with a one-time increase in the deductibility of stock based compensation expense in connection with the former CEO’s separation from the Company in 2012. The impact of these items was partially offset by an increase in state income taxes and the non-renewal of the federal research and development tax credit.

At March 31, 2012, the Company had gross unrecognized tax benefits of $11.3 million, all of which would affect the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.

The Company believes it is reasonably possible that the gross unrecognized tax benefits will decrease by approximately $3.5 million in the next 12 months due to the lapse of the statute of limitations applicable to a tax deduction claimed on a prior year foreign tax return.

The tax years 2005 through 2012 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is not currently under audit in any major taxing jurisdiction.