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Income Taxes
9 Months Ended
Dec. 28, 2012
Income Taxes

Note 9 — Income Taxes

The Company currently estimates its annual effective income tax rate to be approximately 40.1% for fiscal year 2013. The estimated annual effective tax rate is different from the expected statutory rate primarily due to state research and development tax credits. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013. Included within this legislation was an extension of the research and development credit which had previously expired on December 31, 2011. This legislation retroactively reinstates and extends the credit from the previous expiration date through December 31, 2013. As the legislation was not enacted until after the close of the third quarter of fiscal year 2013, the income tax impact of the retroactive reinstatement and extension will not be recognized until the fourth quarter of fiscal year 2013. The expected impact of the research and development credit is an $8.0 million tax benefit which will be recognized in the fourth quarter of fiscal year 2013.

Future realization of the existing deferred tax asset ultimately depends on future profitability and the existence of sufficient taxable income of appropriate character (for example, ordinary income versus capital gains) within the carryforward period available under tax law. In the event that the Company’s estimate of taxable income is less than that required to utilize the full amount of any deferred tax asset, a valuation allowance is established. The Company’s analysis of the need for a valuation allowance considered the loss incurred during the nine months ended December 28, 2012. However, a substantial portion of the current loss was the result of an extinguishment of debt charge that was recorded upon the refinancing of certain of the Company’s debt obligations at lower interest rates, which is expected to provide a benefit to net income in the future. The Company’s evaluation considered other factors including, the Company’s history of positive earnings, taxable income adjusted for certain items, the Company’s significant growth in contractual backlog, and trends and forecasted income by jurisdiction. Consideration was also given to the lengthy period over which these net deferred tax assets can be realized, and the Company’s history of not having federal tax loss carryforwards expire unused.

For the three and nine months ended December 28, 2012, the Company’s gross unrecognized tax benefits decreased by $0.7 million and increased by $0.2 million, respectively. In the next twelve months, it is reasonably possible that the amount of unrecognized tax benefits will decrease by up to approximately $1.1 million as a result of the expiration of the statute of limitations or settlements with tax authorities for previously filed tax returns.