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Income Taxes
3 Months Ended
Oct. 02, 2011
Income Tax Disclosure [Abstract] 
Income Taxes
Income Taxes
The Company recorded an income tax provision of $0.5 million and an income tax benefit of $0.2 million for the first quarter of fiscal 2012 and first quarter of fiscal 2011, respectively. The income tax provision for the first quarter of fiscal 2012 consisted primarily of taxes on foreign income and U.S. state income taxes. The income tax benefit for the first quarter of fiscal 2011 consisted primarily of taxes on foreign income, U.S. state income taxes, and a reversal of previously recorded deferred tax liabilities. The income tax provisions for both quarters were calculated based on the results of operations for the three months ended October 2, 2011 and September 26, 2010, and may not reflect the annual effective rate.
The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Significant management judgment is required in determining the Company's deferred tax assets and liabilities and any valuation allowance recorded against the Company's net deferred tax assets. The Company makes an assessment of the likelihood that the Company's net deferred tax assets will be recovered from future taxable income, and to the extent that recovery is not believed to be likely, a valuation allowance is established.  
The Company has a full valuation allowance against its U.S. net deferred tax assets. The valuation allowance was calculated by assessing both negative and positive evidence when measuring the need for a valuation allowance. Evidence, such as operating results during the most recent three year period was given more weight than our expectations of future profitability, which are inherently uncertain. The Company's U.S. losses during those periods represented sufficient negative evidence to require a full valuation allowance against our U.S. federal and state net deferred tax assets. This valuation allowance will be evaluated periodically and can be reversed partially or totally if business results have sufficiently improved to support realization of the Company's U.S. deferred tax assets.
The Company had unrecognized tax benefits of approximately $25.9 million as of October 2, 2011. The future impact of the unrecognized tax benefit of $25.9 million, if recognized, is as follows: approximately $1.1 million would affect the effective tax rate, and approximately $24.8 million would result in adjustments to deferred tax assets and corresponding adjustments to the valuation allowance. It is reasonably possible that the amount of unrealized tax benefits could decrease by approximately $0.3 million during the next twelve months due to the expiration of the statute of limitations in certain foreign jurisdictions.
Estimated interest and penalties related to the underpayment of income taxes are classified as a component of tax expense in the Condensed Consolidated Statement of Operations and were immaterial for the quarter ended October 2, 2011. Accrued interest and penalties were approximately $0.2 million and $0.2 million as of October 2, 2011 and September 26, 2010, respectively.
In general, the Company's U.S. federal income tax returns are subject to examination by tax authorities for fiscal years 1998 forward due to net operating losses and the Company's state income tax returns are subject to examination for fiscal years 2001 forward due to net operating losses.