Income Taxes

The Company recorded income tax expense of $9,188 and $4,137 for the three months ended September 27, 2014 and September 28, 2013, respectively. The Company recorded income tax expense (benefit) of $8,252 and ($6,119) for the nine months ended September 27, 2014 and September 28, 2013, respectively. The income tax expense for the three and nine months ended September 27, 2014 was primarily the result of application of the Company’s estimated annual effective tax rate to the Company's pre-tax income, and the recognition of the tax impact of discrete events occurring during the quarter. The mix of profits and losses between jurisdictions and the beneficial tax rates in certain foreign jurisdictions impacts the estimate of the annual effective tax rate and the amount of tax expense or benefit recorded in the interim period. The income tax expense for the three months ended September 28, 2013 was primarily associated with U.S. federal and state income taxes due to the mix of profits and losses between jurisdictions. The income tax benefit for the nine months ended September 28, 2013 was primarily the result of the company's pre-tax loss and the recognition of U.S. federal tax credits.

As of September 27, 2014, the U.S. Congress had not extended the general business credit for research and experimentation. The Company has not estimated the effect of the expiration of this credit, nor does the income tax expense for the three and nine months ended September 27, 2014 reflect a benefit for the credit.

No provision has been made for the U.S., state or additional foreign income taxes related to approximately $72,400 of undistributed earnings of foreign subsidiaries which have been permanently reinvested outside the U.S. except for existing earnings that have been previously taxed. In the event of repatriation, which would generally require board approval, the earnings may be subject to an estimated $26,000 of U.S. federal and state income taxes and foreign withholding taxes.

The major jurisdictions in which the Company files tax returns are the United States, Singapore and Costa Rica. In 2012, the Company expanded its presence into Asia by increasing operations in Singapore. Due to agreements with the Costa Rican and Singaporean governments, the Company was granted income tax holidays of varying rates through March 2017 and December 2019, respectively. Incentives from these countries are subject to the Company meeting certain employment and investment requirements. The Company was in compliance with these requirements as of September 27, 2014.

Deferred Income Taxes

As of September 27, 2014, deferred tax assets of $68,975, net of a $14,477 valuation allowance, were recorded on the balance sheet. As of December 31, 2013, the Company had deferred tax assets of $74,341, net of a $16,639 valuation allowance. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more-likely-than-not to be realized. The Company maintains a valuation allowance against the tax effect of all capital loss carryforwards, certain state and foreign net operating loss carryforwards, and certain state credit carryforwards, as management does not believe it is more likely than not that these benefits will be realized in future periods.

Unrecognized Tax Benefits

In the nine months ended September 27, 2014, net unrecognized tax benefits increased $249 primarily as a result of an additional liability recorded to address existing potential exposures from positions that could be challenged by taxing authorities. The Company does not anticipate the release of any unrecognized tax benefits due to the expiration of statutes of limitations within the next twelve months. Interest and penalties associated with unrecognized tax benefits are accrued and classified as a component of tax expense in the statement of operations and comprehensive loss.

Net unrecognized tax benefits at September 27, 2014 and December 31, 2013 were as follows:



	September 27, 2014		December 31, 2013
Net unrecognized tax benefits	$	2,311	$	2,062