	Fiscal Years Ended
	2011			2010			2009
Current income taxes:
Domestic	$	190		$	(31,307	)	$	(15,008	)
Foreign		10,749			(15,000	)		6,246
	$	10,939		$	(46,307	)	$	(8,762	)
Deferred income taxes:
Domestic	$	(6,551	)	$	(4,983	)		78,117
Foreign		(13,142	)		(902	)		25,984
		(19,693	)		(5,885	)		104,101
Total (benefit) provision	$	(8,754	)	$	(52,192	)	$	95,339

	Fiscal Years Ended
	2011			2010			2009
Statutory tax rate		35.0	%		35.0	%		(35.0	)%
State taxes, net of federal benefit		(6.0	)		6.0			―
Change in valuation allowance		(19.2	)		(8.6	)		105.1
Multijurisdictional taxation		(9.5	)		(35.7	)		(4.7	)
Actual and deemed foreign dividends		2.1			51.3			23.9
Foreign tax credit		(5.8	)		(21.5	)		(12.3	)
Research and development credit		―			(4.7	)		(3.1	)
Uncertain tax positions		(2.2	)		(205.1	)		(14.6	)
Goodwill impairment		―			―			3.6
Other, net		―			1.0			(0.2	)
Effective tax rate (benefit)		(5.6	)%		(182.3	)%		62.7	%

	June 26, 2011			June 27, 2010
Deferred tax assets:
Accrued expenses	$	14,436		$	16,348
Accrued compensation		22,717			18,501
Property, plant and equipment		50,053			63,975
Unrealized loss on securities		―			318
Losses carryforward		55,784			58,477
Research and experimental credits		43,463			39,302
Other tax credits		22,683			25,752
Other		1,332			22,350
Total deferred tax assets		210,468			245,023
Valuation allowance		(182,563	)		(236,405	)
Deferred tax liabilities:
Unrealized gain on securities		(4,637	)		(4,682	)
Prepaid expenses		(1,538	)		―
Other		(224	)		(1,133	)
Total deferred tax liabilities		(6,399	)		(5,815	)
Net deferred tax assets	$	21,506		$	2,803

Realization of deferred tax assets is dependent upon generating sufficient taxable income, carryback of losses, offsetting deferred tax liabilities, and the availability of tax planning strategies. In fiscal year 2011, the Company maintained valuation allowances against most of its net deferred tax assets in the U.S. The Company also determined that the valuation allowance established against its deferred tax assets in the U.K during fiscal year 2009 should be partially released in fiscal year 2011, based upon a change in its activities which provides support to rely on forecasted income, with the balance remaining unreleased. The Company evaluates its net deferred income tax assets quarterly to determine whether it is “more likely than not” the assets will be realized.

As cumulative pre-tax losses for the current and prior two years in the Company's U.S. federal consolidated group constitute significant negative evidence, positive evidence of equal or greater significance is needed at a minimum to overcome that negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. The Company did examine the four sources which allow the realization of deferred tax assets. They are: carrybacks, reversals of existing temporary differences, tax planning strategies, and future taxable income exclusive of reversals of existing temporary differences. Of the four sources, loss carrybacks were the only meaningful one available to support the Company's ability to realize the tax benefit of its remaining U.S. federal deferred tax assets. The Company determined that it would not carryback this taxable loss. Therefore, the Company maintained a full valuation allowance against its U.S. federal deferred tax assets. However, the Company determined that it could release a portion of its U.S. valuation allowance against its California deferred tax assets after the Company, as a California combined filing group, no longer recorded cumulative pre-tax losses for the current and prior two years. The Company concluded that it was more likely than not that $10.3 million of California deferred tax assets would be realized based on all evidence available, resulting in a tax benefit for the current fiscal year.

With regards to the Company’s U.K. Newport, Wales subsidiary, the Company completed certain intercompany transactions and intercompany reorganizations during fiscal year 2011. As a result, the Company released a portion of its valuation allowance against its deferred tax assets in the U.K. based on all the available evidence including forecasted future taxable income for the U.K. entity. The Company concluded that $9.6 million of valuation allowance could be released to benefit the current tax provision as the associated deferred tax assets would be more likely than not realized. In addition, the Company reduced its deferred tax assets and associated valuation allowance in the U.K. by $18.4 million due to the taxable income for fiscal year 2011. Furthermore, the Company recorded a deferred charge of $14.6 million in connection with the aforementioned reduction of its deferred tax assets in the U.K. which is offset by the associated valuation allowance, and both balances were reduced by $0.8 million in fiscal year 2011.

In fiscal year 2011, the Company completed its acquisition of CHiL Semiconductor Corporation (See Note 2, “Business Acquisitions”). As a result of this business combination, the Company recorded $16.7 million, $6.7 million, $10.1 million, $0.2 million and $0.2 million of deferred tax assets, valuation allowances, deferred tax liabilities, additional goodwill, and other liabilities, respectively, including measurement period adjustments. The Company also expects to utilize the acquired federal net operating losses of $31.7 million and certain credits of $1.1 million pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code, and the acquired Massachusetts operating losses of $0.1 million and certain credits of $0.1 million pursuant to applicable Massachusetts tax laws.

During fiscal year 2009, the Company filed amended U.S. federal income tax returns and claimed a refund. Of this refund, the Company received $18.9 million during fiscal year 2010, and $5.2 million during fiscal year 2011. The Company does not expect any additional refund associated with the aforementioned amended U.S. federal income tax returns.

During fiscal year 2010, the Company filed amended U.S. state income tax returns and voluntary disclosure agreements and paid approximately $1.3 million in taxes and related interest and penalties to various U.S. state taxing authorities in connection with uncertain tax positions recorded for fiscal years 2001 through 2009. During fiscal year 2011, the Company filed additional amended U.S. state income tax returns and voluntary disclosure agreements and paid $0.8 million in taxes and related interest and penalties as the final part of the state tax return filing process. The Company would not expect to file any additional amended state income tax returns or voluntary disclosure agreements, or make any additional material payments associated with the aforementioned amended U.S. state income tax returns.

During the three months ended September 26, 2010, the statutory tax rate in the U.K. was reduced from 28 percent to 27 percent effective April 1, 2011. As a result, the Company reported a $0.2 million impact due to this rate reduction on its deferred tax assets in the U.K in Q1 of fiscal year 2011. In addition, the Company reduced its deferred tax assets with a full valuation allowance in the U.K. by approximately $2.4 million as a result of the reduced statutory rate.

Subsequent to the balance sheet date of June 26, 2011 and prior to the issuance of the consolidated financial statements, the statutory tax rate in the U.K. was reduced from 27 percent to 26 percent for calendar year 2011, and further reduced to 25 percent for calendar year 2012, effective April 1, 2011 retrospectively. The Company concluded that the overall impact on the tax provision would be $1.6 million in fiscal year 2012. In addition, the Company expects to reduce the U.K. deferred tax assets and valuation allowance by $3.4 and $2.7 million, respectively, as a result of the reduced statutory rate. Both the overall impact on the tax provision and the reduction of the U.K. deferred tax assets and valuation allowance will be reported on the financial report for the first fiscal quarter of 2012 during which the reduced statutory rate becomes law.

During fiscal year 2011, the Company was granted certain incentives by the Singapore Economic Development Board. As a result, the Company started to operate under a tax holiday in Singapore, effective from December 27, 2010 through December 26, 2020. The tax holidays are conditional upon the Company meeting certain employment and investment thresholds. The impact of the Singapore tax holidays decreased the Singapore subsidiary’s deferred taxes by $2.0 million in fiscal year 2011 which benefitted the tax provision. The benefit of the tax holidays on net income per share (diluted) was $0.03 for fiscal year 2011.

The Company operated in multiple foreign jurisdictions with lower statutory tax rates, and its operation in Singapore had the most significant impact on the effective tax rate for the fiscal year 2011. In addition to the $2.0 million benefit due to the tax holiday, the Company was subject to an effective tax rate of 15 percent in Singapore for fiscal year 2011.

Beginning balances of June 28, 2009	$	66,224
Increases for positions taken in current year		23,738
Increases for positions taken in a prior year		6,506
Decreases for positions taken in a prior year		(11,548	)
Decreases for settlements with taxing authorities		(35,275	)
Decreases for lapses in the applicable statute of limitation		(4,433	)
Unrecognized tax benefits at June 27, 2010	$	45,212

Increases for positions taken in current year	$	2,708
Increases for positions taken in a prior year		2,347
Decreases for positions taken in a prior year		(1,810	)
Decreases for settlements with taxing authorities
Decreases for lapses in the applicable statute of limitation		(2,400	)
Unrecognized tax benefits at June 26, 2011	$	46,057

As of June 26, 2011, the liability for income tax associated with uncertain tax positions was $17.1 million. If recognized, the liability associated with uncertain tax positions would result in a benefit to income taxes on the consolidated statement of operations of $11.2 million which would reduce the Company’s future effective tax rate. For fiscal year 2011, $2.9 million of increases to uncertain tax positions, if recognized, would affect the effective tax rate; however, it would be in the form of long-term deferred tax assets which would attract a full valuation allowance.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. The Company had accrued interest and penalties related to uncertain tax positions as of June 26, 2011 and June 27, 2010 of $2.9 million and $4.2 million, respectively. The change in interest and penalties during fiscal year 2011 was primarily the result of the lapsing of certain foreign jurisdictions’ statute of limitations. The change in interest and penalties during fiscal year 2010 was primarily the result of a favorable ruling from the Joint Committee on Taxation for prior year refund claims, the filing of certain state tax returns for fiscal years 2005 – 2009, amended state tax returns for fiscal years 2001 – 2007, and the lapsing of certain foreign jurisdictions’ statute of limitations.

The uncertain tax positions are expected to increase by $2.5 million during the next twelve months primarily due to certain domestic positions expected to be taken and increases in uncertain tax position in certain foreign tax jurisdictions, offset by small decreases due to lapses of statute of limitations in certain foreign tax jurisdictions.

The Company anticipates that there will be other changes to the unrecognized tax benefit associated with uncertain tax positions due to the expiration of statutes of limitation, payment of tax on amended returns, audit settlements and other changes in reserves. However, due to the uncertainty regarding the timing of these events, a current estimate of the range of other changes that may occur within the next twelve months cannot be made.

The Company’s major tax jurisdictions are U.S. Federal, California, Japan, United Kingdom, Singapore, Germany, Hong Kong and Mexico. In the ordinary course of business, the Company is subject to examination by taxing authorities. As of June 26, 2011, the Company is no longer subject to U.S. federal income tax examinations for years before the fiscal year ended June 28, 2009; California income tax examinations before the fiscal year ended July 2, 2006; Japan income tax examinations before the fiscal year ended June 30, 2006; United Kingdom before the fiscal year ended July 2, 2006; Germany tax examinations before the fiscal year ended July 2, 2006; Singapore tax examination for the year of assessment 2007 and before; Mexico tax examination for the assessment year ended December 31, 2001; and Hong Kong profits tax examinations before the assessment year ended March 31, 2005.

As a matter of course, the Company is regularly audited by various taxing authorities. Unfavorable settlement of any particular issue may require the use of cash. Favorable resolution may be recognized as a reduction to the effective tax rate in the year of resolution or a reduction of goodwill if it relates to purchased tax liabilities. The Company’s interest and penalties associated with income taxes are included in both accrued income taxes and long-term income taxes payable, as appropriate.

The Company has federal, state and foreign net operating loss carryforwards. The federal net operating loss of $25.7 million will expire in 2029 through 2032, and the California net operating loss of $85.0 million will expire in 2015 through 2029. The foreign net operating losses of $6.8 million have no expiration. The Company has foreign tax credits of $45.0 million that will expire from 2019 through 2021. The Company also has federal research credits of $13.1 million that will expire in 2026 thru 2032, and California research credits of $39.7 million that have no expiration.

As of June 26, 2011, U.S. income taxes have not been provided on approximately $79.1 million of undistributed earnings of foreign subsidiaries since those earnings are considered to be invested indefinitely. Determination of the amount of unrecognized deferred tax liabilities for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable. There has been a change in the Company’s position on undistributed earnings regarding the pending liquidation of a foreign subsidiary into the U.S. consolidated group. The Company has not recorded a deferred tax liability on any potential gain as the earnings and profits of the subsidiary had been recognized as U.S. income in previous periods.

Pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code, the utilization of operating loss carryforward and other tax attributes may be subject to limitations if certain ownership changes occur during a three-year testing period. The Company does not believe an ownership change has occurred as of June 26, 2011 that would limit the Company’s utilization of any operating loss carryforward or other tax attributes.