Income Taxes

6 Months Ended

Jul. 01, 2012

Income Taxes [Abstract]

Income Taxes

Note 8: Income Taxes

Income tax expense was $3.7 million and $11.8 million for the three and six months ended July 1, 2012, respectively. The effective rate reflected in the provision for income taxes on income from continuing operations before taxes is 8.0% and 15.0% for the three and six months ended July 1, 2012, respectively.

The most significant factor in the difference between the effective rate and the amount determined by applying the applicable statutory United States tax rate of 35% is the effect of changes in our deferred tax asset valuation allowance. For the three and six months ended July 1, 2012, we recorded reductions of $10.7 million and $10.4 million, respectively, in our valuation allowance associated primarily with net operating losses in certain foreign tax jurisdictions. We evaluated and assessed the expected utilization of net operating losses, future book and taxable income, available tax planning strategies, and our overall deferred tax position to determine the appropriate amount and timing of valuation allowance adjustments. As a result of changes in our business, available tax planning strategies, and future taxable income projections, we determined that the weight of evidence regarding the future realizability of the deferred tax assets had become predominately positive and realization of the deferred tax assets was more likely than not.

As of July 1, 2012 and December 31, 2011, our deferred tax asset valuation allowance was $13.3 million and $24.9 million, respectively.

The tax rate differential associated with our foreign earnings is also a significant factor in the difference between the effective rate and the amount determined by applying the applicable statutory United States tax rate of 35%.