Income Tax Expense

6 Months Ended

Dec. 25, 2011

Income Tax Expense [Abstract]

Income Tax Expense

NOTE 10 — INCOME TAX EXPENSE

The Company's effective tax rate for the three and six months ended December 25, 2011 was approximately 16.5% and 17.3%, respectively.

The differences between the U.S. federal statutory tax rate of 35% and the Company's effective tax rates for the three and six months ended December 25, 2011 were primarily due to the geographic mix of income and research and development tax credits partially offset by the tax effect of non-deductible stock-based compensation. The effective tax rates recorded during the three and six months ended December 25, 2011 included the tax impact of discrete items, which were recorded during the quarter in which they occurred. During the three and six months ended December 25, 2011, discrete items primarily consisted of: (1) a tax expense of $2.2 million and $3.8 million, respectively, related to the filing of prior year foreign tax returns, which resulted in provision to return true-ups, (2) a tax expense of $0.8 million and $1.7 million, respectively, of interest related to uncertain tax positions, (3) a tax benefit of $2.5 million and $3.7 million, respectively, related to the acquisition, restructuring and asset impairment related expenses, and (4) a tax benefit of $6.9 million and $7.1 million , respectively, related to the recognition of previously unrecognized tax benefits and the reversal of the related interest accruals due to finalization of certain foreign uncertain tax positions. The total gross unrecognized tax benefits as of each date noted below were as follows:

	December  25, 2011		June  26, 2011
	(in millions)
Total gross unrecognized tax benefits	$	182.0	$	181.5

If the gross unrecognized tax benefits were recognized in a future period, it would result in a net tax benefit of $119.6 million and a reduction of the effective tax rate.

The Company recognizes interest expense and penalties related to the above unrecognized tax benefits within income tax expense. As of December 25, 2011, the Company had accrued approximately $17.1 million for the payment of gross interest and penalties, relating to unrecognized tax benefits, compared to $16.9 million as of June 26, 2011.

The Internal Revenue Service ("IRS") is examining the Company's U.S. income tax return for fiscal years 2008 and 2009. The Company is also under audit by the California Franchise Tax Board ("FTB") for fiscal years 2005 and 2006. As of December 25, 2011, no significant adjustments have been proposed by the IRS or FTB. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur. In addition, the Company is also subject to audits by foreign tax authorities.

The Company files U.S. federal, U.S. state, and foreign income tax returns. As of December 25, 2011, tax years 2003-2011 remain subject to examination in the jurisdictions where the Company operates.

The Company is in various stages of the examinations in connection with all of its tax audits worldwide and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next twelve-month period the Company may experience an increase or decrease in its unrecognized tax benefits. It is not possible to determine either the magnitude or the range of any increase or decrease at this time.

Realization of the Company's net deferred tax assets is based upon the weight of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such assets will be realized with the exception of $46.2 million related to certain California and foreign deferred tax assets. However, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. If the valuation allowance related to deferred tax assets were released as of December 25, 2011, approximately $46.2 million would be credited to the statement of operations.