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Income Taxes | 12 Months Ended
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Dec. 29, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Assets and Liabilities - The Company accounts for income taxes whereby that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax accounting for assets and liabilities. Also, deferred tax assets are reduced by a valuation allowance to the extent that management cannot conclude that it is more likely than not that a portion of the deferred tax asset will be realized in the future. The Company evaluates the deferred tax assets on a continuous basis throughout the year to determine whether or not a valuation allowance is appropriate. Factors used in this determination include future expected income and the underlying asset or liability which generated the temporary tax difference. The income tax provision is primarily impacted by federal statutory rates, state and foreign income taxes and changes in the valuation allowance. Income before provision for income taxes consists of the following (in thousands):
| Years Ended
| December 29, 2012 |  | December 31, 2011 |  | January 1, 2011
Domestic | $ | 1,887 |  |  | $ | 41,773 |  |  | $ | 37,640 |
Foreign | 2,732 |  |  | 2,811 |  |  | 3,049 |
Income (loss) before income taxes | $ | 4,619 |  |  | $ | 44,584 |  |  | $ | 40,689 |
The provision (benefit) for income taxes consists of the following (in thousands):
| Years Ended
| December 29, 2012 |  | December 31, 2011 |  | January 1, 2011
Current: |  |  |  |  |
Federal | $ | (2,403 | ) |  | $ | 11,059 |  |  | $ | 2,031 |
State | (492 | ) |  | 1,048 |  |  | 659 |
Foreign | 270 |  |  | 354 |  |  | 55 |
Total current | (2,625 | ) |  | 12,461 |  |  | 2,745 |
Deferred: |  |  |  |  |
Federal | 1,753 |  |  | 2,366 |  |  | (14,266 | )
State | 379 |  |  | (158 | ) |  | (459 | )
Foreign | 647 |  |  | 1,230 |  |  | (3,279 | )
Total deferred | 2,779 |  |  | 3,438 |  |  | (18,004 | )
Provision (benefit) for income taxes | $ | 154 |  |  | $ | 15,899 |  |  | $ | (15,259 | )
Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
| At
| December 29, 2012 |  | December 31, 2011
Deferred tax assets: |  |  |
Reserves and accruals | $ | 7,682 |  |  | $ | 12,441 |
Deferred revenue | 1,714 |  |  | 1,308 |
Shared based compensation | 3,129 |  |  | 2,242 |
Tax credit carry-forwards | 1,510 |  |  | 999 |
Net operating losses | 10,830 |  |  | 10,133 |
Depreciation & amortization | 3,273 |  |  | 2,957 |
Other | 945 |  |  | 967 |
Total deferred tax assets | 29,083 |  |  | 31,047 |
Less: Valuation allowance | (10,229 | ) |  | (8,142 | )
Total deferred tax assets net of valuation allowance | 18,854 |  |  | 22,905 |
Deferred tax liabilities: |  |  |
Depreciation & amortization | (5,797 | ) |  | (6,229 | )
Other | (793 | ) |  | (1,406 | )
Total deferred tax liabilities | (6,590 | ) |  | (7,635 | )
Net deferred tax assets | $ | 12,264 |  |  | $ | 15,270 |
As of December 29, 2012, the Company had net operating loss carryforwards of $27.3 million in California and $37.2 million in foreign countries, which begin to expire in 2016 and 2013 respectively. A total of $1.8 million of the California net operating loss carryforward and $1.7 million of the foreign net operating loss carryforwards are related to excess tax benefits as a result of stock option exercises and therefore will be recorded in additional paid-in capital in the period that they become realized. During the year ended December 29, 2012, the Company realized excess benefits as a result of stock option exercises in the amount of $0.9 million, which was appropriately recorded to additional paid-in-capital. As of December 29, 2012, the Company had available for carryforward state research and experimental tax credits and other credits of $3.7 million. State research and experimental tax credits carryforward indefinitely. A total of $0.2 million of the state research and experimental tax credits are related to excess tax benefits as a result of stock option exercises and therefore will be recorded to additional paid-in-capital in the period that they become realized. During the years ended December 29, 2012 December 31, 2011 the valuation allowance increased by $2.1 million and $1.1 million, respectively. The valuation allowance increase in 2012 is primarily related to foreign losses without benefit. Changes in tax laws and tax rates could affect our recorded deferred tax assets and liabilities in the future. Our tax liabilities involve dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Management will account for any such changes or factors in the period in which such law changes are enacted. Differences between income taxes computed by applying the statutory federal income tax rate to income before income taxes and the provision (benefit) for income taxes consist of the following (in thousands):
| Years Ended
| December 29, 2012 |  | December 31, 2011 |  | January 1, 2011
Income taxes computed at U.S. statutory rate | $ | 1,616 |  |  | $ | 15,604 |  |  | $ | 14,241 |
State income taxes | (116 | ) |  | 636 |  |  | 1,766 |
Foreign tax rate differential | (275 | ) |  | 907 |  |  | (3,512 | )
Change in valuation allowance | — |  |  | 17 |  |  | (28,825 | )
Domestic production activities deduction | (17 | ) |  | (1,033 | ) |  | (404 | )
Tax credits | — |  |  | (601 | ) |  | (869 | )
Benefit of tax elections | (1,309 | ) |  | — |  |  | — |
Liabilities for uncertain tax positions | 66 |  |  | 153 |  |  | 1,793 |
Other, net | 189 |  |  | 216 |  |  | 551 |
Provision (benefit) for income taxes | $ | 154 |  |  | $ | 15,899 |  |  | $ | (15,259 | )
As of December 29, 2012, approximately $1.4 million of undistributed earnings from non-U.S. operations held by our foreign subsidiaries are designated as indefinitely reinvested outside the U.S. Accordingly, no additional U.S. income taxes or additional foreign withholding taxes have been provided thereon. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. On January 2, 2013, the President signed into law The American Taxpayer Relief Act of 2012 (ATRA). Under prior law, a taxpayer was entitled to a research tax credit for qualifying amounts incurred through December 31, 2011. The ATRA extends the research credit for two years for qualified research expenditures incurred through the end of 2013. The extension of the research credit is retroactive and includes amounts incurred after 2011. The Company estimates the benefit that it will receive relating to 2012 as a result of the credit extension will be approximately $0.5 million. The benefit will be recognized in the period of enactment, which is the first quarter of 2013. We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. The accounting for uncertainty in income taxes recognized in an enterprise's financial statements prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return, and the derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Years Ended
| December 29, 2012 |  | December 31, 2011 |  | January 1, 2011
Unrecognized tax benefits-beginning of the period | $ | 3,599 |  |  | $ | 3,370 |  |  | $ | 1,032 |
Foreign currency movements | — |  |  | — |  |  | (15 | )
Gross increases-tax positions in prior period | — |  |  | 154 |  |  | 1,971 |
Gross decreases-tax positions in prior period | (183 | ) |  | — |  |  | — |
Gross increases-current-period tax positions | 265 |  |  | 622 |  |  | 530 |
Lapse of statute of limitations | (217 | ) |  | (547 | ) |  | (148 | )
Unrecognized tax benefits - end of the period | $ | 3,464 |  |  | $ | 3,599 |  |  | $ | 3,370 |
The unrecognized tax benefits at December 29, 2012 were $3.5 million, of which $2.9 million would impact the effective tax rate if recognized. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. The total amount of penalties and interest are not material as of December 29, 2012, December 31, 2011, and January 1, 2011. The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The Company is subject to taxation in the U.S. and various states including California, and foreign jurisdictions including Korea, Japan and United Kingdom. Due to tax attribute carry-forwards, the Company is subject to examination for tax years 2003 forward for U.S. tax purposes. The Company was also subject to examination in various states for tax years 2002 forward. The Company is subject to examination for tax years 2006 forward for various foreign jurisdictions.

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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 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 2: 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 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 7: 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 8: 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 + Details
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