Income Taxes

9 Months Ended

Sep. 24, 2011

Income Taxes [Abstract]

Income Taxes

6. Income Taxes

The income tax provision (benefit) included in the condensed consolidated statements of income for the three and nine months ended September 24, 2011 and September 25, 2010, is based on the estimated annual effective tax rate for the entire year including the impact of discrete items that are recorded in the period the related discrete event occurs. These estimated effective tax rates are subject to adjustment in subsequent quarterly periods as our estimates of pretax income or loss for the year change. The effective tax rate (benefit) for the three and nine months ended September 24, 2011, was (21.7)% and 8.9%, respectively, and differs from the U.S. federal statutory rate primarily due to a reduction in our unrecognized tax benefits, a reduction in our deferred tax asset valuation allowance, foreign income taxed at lower rates, state taxes and interest on unrecognized tax benefits. The effective tax rate for the three and nine months ended September 25, 2010, was 14.6% and 22.4%, respectively, and differs from the U.S. federal statutory rate primarily due to a reduction in our deferred tax asset valuation allowance, foreign income taxed at lower rates, state taxes and interest on unrecognized tax benefits.

In the quarter ended June 27, 2009, we recorded an increase in our valuation allowance on domestic deferred tax assets, with a corresponding charge to our income tax provision, of approximately $19.6 million as we were unable to conclude that it was more likely than not that such assets would be realized. Our deferred tax asset valuation allowance at September 24, 2011 was approximately $21.1 million on gross deferred tax assets of approximately $27.3 million. The remaining $6.2 million of gross deferred tax assets for which a valuation allowance was not recorded are realizable through future reversals of existing taxable temporary differences or loss carryback.

During the three and nine month periods ended September 24, 2011 our unrecognized tax benefits and interest accrued related to unrecognized tax benefits decreased $1.1 million and $1.0 million, respectively.