Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

INCOME TAXES

13. INCOME TAXES

The Company accrued an insignificant amount for interest and penalties, following applicable accounting guidance, related to gross unrecognized tax benefits, which are included in the provision for income taxes for the three and nine months ended September 30, 2011.

The Company included in its unrecognized tax benefit of $29.9 million at September 30, 2011, $20.5 million of tax benefits that, if recognized, would reduce the Company’s annual effective tax rate. It is reasonably possible that the Company’s unrecognized tax benefits could decrease by a range between zero and $2.8 million within the next twelve months, depending on the outcome of certain tax audits or statutes of limitations in foreign jurisdictions.

A provision for income taxes of $0.9 million and $1.4 million was recorded for the three and nine months ended September 30, 2011, respectively. A provision for income taxes of $1.7 million and $0.2 million was recorded for the three and nine months ended September 30, 2010, respectively. While the Company is in a loss position on a consolidated basis for the three and nine months ended September 30, 2011, tax expense recorded in the three and nine month period ended September 30, 2011 resulted primarily from income earned in various jurisdictions as a result of reimbursements for intercompany services. Tax expense recorded for the three and nine months ended September 30, 2010, also resulted primarily from income earned in various jurisdictions as a result of reimbursements for intercompany services. As a result, the Company’s effective tax rates were (2.3%) and (1.3%) in the three and nine months ended September 30, 2011, giving rise to a significant difference between the 35% federal statutory rate and the Company’s effective tax rates, in the three and nine months ended September 30, 2011 and September 30, 2010.

The Company’s ability to use federal and state net operating loss and credit carry forwards to offset future taxable income and future taxes, respectively, is subject to restrictions attributable to equity transactions that result from changes in ownership as defined by Internal Revenue Code (“IRC”) Sections 382 and 383. As discussed in Note 5, “Business Combinations” of Notes to Condensed Consolidated Financial Statements, on February 8, 2010, Trident issued 104,204,348 newly issued shares of Trident common stock to NXP, equal to 60% of the then total outstanding shares of Trident common stock. The impact of this event reduced the Company’s availability of net operating loss and tax credit carry forwards for federal and state income tax purposes.

The Internal Revenue Service has initiated an examination of the Company’s U.S. corporate income tax returns for fiscal years ended December 31, 2009, June 30, 2008 and June 30, 2009. At this time, it is not possible to estimate the potential impact that the examination may have on income tax expense. Although timing of the resolution or closure on audits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.