XML 47 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
3 Months Ended
Mar. 30, 2012
Income Tax Expense (Benefit) [Abstract]  
Income Tax Disclosure [Text Block]
Income Taxes

Our effective tax rate reflects the impact of a significant amount of our earnings being taxed in foreign jurisdictions at rates below the U.S. statutory tax rate. Our effective tax rate for the three months ended March 30, 2012 was 1.7%, compared with 8.7% for the three months ended April 1, 2011. The net decrease in our effective tax rate was primarily due to higher one-time tax benefits in 2012 compared to 2011, partially offset by the absence of a U.S. Federal Research and Development Tax Credit in 2012, due to its expiration in 2011. During the three months ended March 30, 2012, we reversed $6.9 million of liabilities for uncertain tax positions as a result of a Statutory Notice of Deficiency received from the Internal Revenue Service (“IRS”) for 2005 to 2007. In addition, we reversed $5.2 million of liabilities for uncertain tax positions upon expiration of the statutes of limitations for certain foreign jurisdictions.

We file income tax returns with the IRS and in various states and foreign jurisdictions. In 2008, the IRS completed field examinations of our tax returns for 2002 through 2004 and assessed $34.5 million in additional taxes (excluding interest). We appealed the IRS notice and resolved a number of issues. On December 8, 2011, the IRS issued a Statutory Notice of Deficiency, revising the assessment of additional taxes for those years to $19.8 million, excluding interest and penalties. The Statutory Notice of Deficiency relates primarily to proposed inter-company adjustments between related companies, computational adjustments to the R&D Credit and reductions to the benefits of tax credit carrybacks and carryforwards to subsequent years. We paid $18.0 million to the IRS in 2008, representing a payment on bond for items associated with the IRS field examinations for 2002 through 2004. On March 6, 2012, we filed a petition to the U.S. Tax Court requesting a redetermination of the tax deficiencies regarding certain proposed IRS adjustments regarding 2004 and are evaluating our course of action regarding 2002 and 2003.

In addition, the IRS completed field examinations of our tax returns for 2005 through 2007 and assessed $34.2 million in additional taxes (excluding interest). On January 23, 2012, the IRS issued a Statutory Notice of Deficiency, revising the assessment of additional taxes for those years to $21.4 million, excluding interest and penalties. The Statutory Notice of Deficiency relates primarily to proposed intercompany adjustments between related companies, computational adjustments to the R&D credit and reductions to the benefits of tax credit carrybacks and carryforwards to subsequent years. On April 20, 2012, we filed a petition to the U.S. Tax Court requesting a redetermination of the tax deficiencies regarding certain proposed IRS adjustments regarding 2005 through 2007.

We believe we have made adequate tax payments and/or accrued adequate amounts for our tax liabilities for 2002 through 2007. It is reasonably possible over the next twelve months that events will occur in connection with our 2002 through 2007 tax years that could materially affect our consolidated operating results, cash flows or financial position. However, we are unable to make a reasonable estimate of the range of potential adjustments.

Other significant jurisdictions in which we are or may be subject to examination for fiscal years 2002 forward include China (including Hong Kong), Ireland, Malaysia, Japan, United Kingdom and the state of California. We believe we have made adequate tax payments and/or accrued adequate amounts such that the outcome of these audits will have no material adverse effect on our consolidated operating results. Due to the potential resolution of various tax examinations, and the expiration of various statutes of limitations, it is possible that our gross unrecognized tax benefits may change within the next twelve months. However, given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

As of March 30, 2012 we had $280.6 million of unrecognized tax benefits that, if recognized, would impact our effective tax rate. On December 31, 2011, we had $284.9 million of unrecognized tax benefits. We are unable to make a reasonable estimate as to when cash settlements with the relevant taxing authorities will occur.

We recognize interest and penalties related to uncertain tax positions in our income tax provision. We had accrued approximately $50.6 million and $54.8 million for the payment of interest and penalties related to uncertain tax positions as of March 30, 2012 and December 31, 2011, respectively.