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Income Taxes | 12 Months Ended
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Sep. 28, 2012
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes consists of the following components (in thousands):
| Fiscal Years Ended
| September 28, 2012 |  | September 30, 2011 |  | October 1, 2010
United States | $ | 113,140 |  |  | $ | 208,926 |  |  | $ | 164,094 |
Foreign | 141,836 |  |  | 84,960 |  |  | 30,980 |
Income before income taxes | $ | 254,976 |  |  | $ | 293,886 |  |  | $ | 195,074 |
The provision for income taxes consists of the following (in thousands):
| Fiscal Years Ended
| September 28, 2012 |  | September 30, 2011 |  | October 1, 2010
Current tax expense (benefit): |  |  |  |  |
Federal | $ | 32,414 |  |  | $ | 25,421 |  |  | $ | 11,855 |
State | (1,741 | ) |  | 422 |  |  | 946 |
Foreign | 8,623 |  |  | 4,340 |  |  | 684 |
| 39,296 |  |  | 30,183 |  |  | 13,485 |
Deferred tax expense (benefit): |  |  |  |  |
Federal | 12,998 |  |  | 35,053 |  |  | 44,072 |
State | (3,670 | ) |  | (1,048 | ) |  | (2,846 | )
Foreign | 405 |  |  | 961 |  |  | 235 |
| 9,733 |  |  | 34,966 |  |  | 41,461 |
Change in valuation allowance | 3,869 |  |  | 2,152 |  |  | 2,834 |
Provision for income taxes | $ | 52,898 |  |  | $ | 67,301 |  |  | $ | 57,780 |
The actual income tax expense is different than that which would have been computed by applying the federal statutory tax rate to income before income taxes. A reconciliation of income tax expense as computed at the United States federal statutory income tax rate to the provision for income tax expense follows (in thousands):
| Fiscal Years Ended
| September 28, 2012 |  | September 30, 2011 |  | October 1, 2010
Tax expense at United States statutory rate | $ | 89,241 |  |  | $ | 102,860 |  |  | $ | 68,276 |
Foreign tax rate difference | (44,733 | ) |  | (24,394 | ) |  | (8,889 | )
Deemed dividend from foreign subsidiary | 2,446 |  |  | 43 |  |  | 884 |
Research and development credits | (1,689 | ) |  | (17,720 | ) |  | (5,820 | )
Change in tax reserve | 10,419 |  |  | 9,405 |  |  | 4,413 |
Change in valuation allowance | 3,869 |  |  | 2,152 |  |  | 2,834 |
Non deductible debt retirement premium | — |  |  | — |  |  | 64 |
Domestic production activities deduction | (3,923 | ) |  | (6,055 | ) |  | (2,263 | )
International restructuring | — |  |  | — |  |  | (3,468 | )
Other, net | (2,732 | ) |  | 1,010 |  |  | 1,749 |
Provision for income taxes | $ | 52,898 |  |  | $ | 67,301 |  |  | $ | 57,780 |
The Company operates in foreign jurisdictions with income tax rates lower than the United States tax rate of 35%. The Company's tax benefits related to foreign earnings taxed at a rate less than the United States federal rate were $44.7 million and $24.4 million as of September 28, 2012 and September 30, 2011, respectively. As of September 28, 2012, the United States Congress has not taken action to extend the federal tax credit available under the Internal Revenue Code for research and development. Accordingly, the income tax provision for the year ended September 28, 2012 does not include the impact of such research and development tax credits earned after December 31, 2011. On October 2, 2010, the Company expanded its presence in Asia by launching operations in Singapore. The Company operates under a tax holiday in Singapore, which is effective through September 30, 2020. The tax holiday is conditional upon the Company's compliance in meeting certain employment and investment thresholds in Singapore. The impact of the tax holiday decreased Singapore's taxes by $5.9 million which resulted in a benefit of $0.03 of basic and diluted earnings per share for the fiscal year ended September 28, 2012. The impact of the tax holiday to fiscal 2011 was not material. As a result of the enactment of the Tax Relief Act of 2010 which retroactively reinstated and extended the research and development tax credit, $6.2 million of federal research and development tax credits which were earned in fiscal year 2010 reduced our tax rate during the year ended September 30, 2011. During fiscal year 2010, the Company restructured its international operations resulting in a tax benefit of $3.5 million. This consisted of a tax benefit of $6.3 million due to reassessing the United States income tax required to be recorded on earnings of our operations in Mexico, offset by $2.8 million of tax provision related to the transfer of assets to an affiliated foreign company. As a result of this restructuring, the Company is no longer required to assess United States income tax on the earnings of its Mexican business. Deferred income tax assets and liabilities consist of the tax effects of temporary differences related to the following (in thousands):
| Fiscal Years Ended
| September 28, 2012 |  | September 30, 2011
Deferred Tax Assets: |  |  |
Current: |  |  |
Inventory | $ | 5,293 |  |  | $ | 4,181 |
Bad debts | 170 |  |  | 162 |
Accrued compensation and benefits | 4,041 |  |  | 3,946 |
Product returns, allowances and warranty | 1,916 |  |  | 1,222 |
Restructuring | 606 |  |  | 515 |
Other – net | 520 |  |  | 998 |
Current deferred tax assets | 12,546 |  |  | 11,024 |
Less valuation allowance | (3,162 | ) |  | (2,431 | )
Net current deferred tax assets | 9,384 |  |  | 8,593 |
Long-term: |  |  |
Intangible assets | 6,638 |  |  | 7,660 |
Share-based and other deferred compensation | 37,601 |  |  | 27,921 |
Net operating loss carry forwards | 35,809 |  |  | 22,143 |
Federal tax credits | 17,199 |  |  | 37,717 |
State tax credits | 33,628 |  |  | 26,111 |
Other - net | 1,785 |  |  | — |
Long-term deferred tax assets | 132,660 |  |  | 121,552 |
Less valuation allowance | (43,791 | ) |  | (36,943 | )
Net long-term deferred tax assets | 88,869 |  |  | 84,609 |
Deferred tax assets | 145,206 |  |  | 132,576 |
Less valuation allowance | (46,953 | ) |  | (39,374 | )
Net deferred tax assets | 98,253 |  |  | 93,202 |
Deferred Tax Liabilities: |  |  |
Current: |  |  |
Prepaid insurance | (894 | ) |  | (723 | )
Current deferred tax liabilities | (894 | ) |  | (723 | )
Long-term: |  |  |
Property, plant and equipment | (17,567 | ) |  | (18,084 | )
Other – net | (3 | ) |  | (208 | )
Intangible assets | (6,157 | ) |  | (5,943 | )
Long-term deferred tax liabilities | (23,727 | ) |  | (24,235 | )
Net deferred tax liabilities | (24,621 | ) |  | (24,958 | )
Total deferred tax assets | $ | 73,632 |  |  | $ | 68,244 |
In accordance with GAAP, management has determined that it is more likely than not that a portion of its historic and current year income tax benefits will not be realized. As of September 28, 2012, the Company has maintained a valuation allowance of $47.0 million. This valuation allowance is comprised of $33.6 million related to U.S. State tax credits, of which $3.6 million are state tax credits acquired from AATI in fiscal year 2012, and $13.4 million related to foreign deferred tax assets. If these benefits are recognized in a future period the valuation allowance on deferred tax assets will be reversed and up to a $46.6 million income tax benefit, and up to a $0.4 million reduction to goodwill may be recognized. The Company will need to generate $209.0 million of future United States federal taxable income to utilize our United States deferred tax assets as of September 28, 2012. Deferred tax assets are recognized for foreign operations when management believes it is more likely than not that the deferred tax assets will be recovered during the carry forward period. The Company will continue to assess its valuation allowance in future periods. As of September 28, 2012, the Company has United States federal net operating loss carry forwards of approximately $74.3 million, including $29.5 million related to the acquisition of SiGe, which will expire at various dates through 2030 and $28.1 million related to the acquisition of AATI, which will expire at various dates through 2031. The utilization of these net operating losses is subject to certain annual limitations as required under Internal Revenue Code section 382 and similar state income tax provisions. The Company also has United States federal income tax credit carry forwards of $37.8 million, of which $30.4 million of federal income tax credit carry forwards have not been recorded as a deferred tax asset. The Company also has state income tax credit carry forwards of $33.6 million, for which the Company has provided a valuation allowance. The United States federal tax credits expire at various dates through 2032. The state tax credits relate primarily to California research tax credits which can be carried forward indefinitely. The Company has continued to expand its operations and increase its investments in numerous international jurisdictions. These activities will increase the Company’s earnings attributable to foreign jurisdictions. As of September 28, 2012, no provision has been made for United States federal, state, or additional foreign income taxes related to approximately $371.5 million of undistributed earnings of foreign subsidiaries which have been or are intended to be permanently reinvested. It is not practicable to determine the United States federal income tax liability, if any, which would be payable if such earnings were not permanently reinvested. The Company’s gross unrecognized tax benefits totaled $52.4 million and $32.1 million as of September 28, 2012 and September 30, 2011, respectively. Of the total unrecognized tax benefits at September 28, 2012, $38.8 million would impact the effective tax rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax rate, if recognized, due to the Company’s valuation allowance and certain positions which were required to be capitalized. There are no positions which the Company anticipates could change within the next twelve months. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
| Unrecognized tax benefits
Balance at September 30, 2011 | $ | 32,136 |
Increases based on positions related to prior years | 9,004 |
Increases based on positions related to current year | 11,265 |
Decreases relating to settlements with taxing authorities | — |
Decreases relating to lapses of applicable statutes of limitations | (25 | )
Balance at September 28, 2012 | $ | 52,380 |
The current year increase in positions related to prior years of $9.0 million primarily includes $9.7 million of positions acquired from AATI during the fiscal year. During the year ended September 28, 2012, the Company did not recognize any significant amount of previously unrecognized tax benefits related to the expiration of the statute of limitations. The Company recognized $0.6 million of accrued interest or penalties related to unrecognized tax benefits during fiscal year 2012. The Company’s major tax jurisdictions as of September 28, 2012 are the United States, California, Iowa, Singapore and Canada. For the United States, the Company has open tax years dating back to fiscal year 2002 due to the carry forward of tax attributes. For California and Iowa, the Company has open tax years dating back to fiscal year 2002 due to the carry forward of tax attributes. For Singapore, the Company has open tax years dating back to fiscal year 2011. For Canada, the Company has open tax years dating back to fiscal year 2004.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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