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Income Taxes
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3 Months Ended |
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Mar. 31, 2012
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| Income Taxes [Abstract] | |
| Income Taxes |
Note 10. Income Taxes As discussed in Note 1 “Description of Business and Basis of Presentation”, on January 28, 2011, Polymer merged with Merger Sub, a wholly-owned subsidiary of Parent, and became a member of a new consolidated group for income tax filing purposes for the U.S. federal tax return. As a result of this change in control, the Company will need to evaluate its domestic net operating losses under the provisions of Code Section 382 (“Section 382”), “Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change”. Although Section 382 limits a company’s ability to use net operating losses on an annual basis, management believes the Section 382 limitation will not have a significant impact on the aggregate availability of U.S. federal net operating losses, and will have no material impact on the financial position of the Company. During the three month period ended March 31, 2012, the Company recognized an income tax expense of $4.5 million on consolidated pre-tax book income from continuing operations of $4.2 million. During the two month period ended April 2, 2011, the Company recognized an income tax expense of $0.1 million on consolidated pre-tax book losses from continuing operations of $35.5 million. During the one month period ended January 28, 2011, the Company recognized an income tax expense of $0.5 million, on consolidated pre-tax book losses from continuing operations of $17.8 million. The Company’s income tax expense in any period is different than such expense determined at the U.S. statutory rate primarily due to losses in certain jurisdictions for which no income tax benefits are anticipated, foreign withholding taxes for which tax credits are not anticipated, changes in the amounts recorded for tax uncertainties in accordance with ASC 740, “Income Taxes”, and foreign taxes calculated at statutory rates different than the U.S. federal statutory rate. The total unrecognized tax benefit (“UTB”) of $27.2 million as of March 31, 2012, which includes $13.9 million of interest and penalties, represents the amount of UTBs that, if recognized, would impact the effective income tax rate in future periods. Included in the balance of UTBs as of March 31, 2012 was $3.8 million related to tax positions for which it is reasonably possible that the total amount could significantly change during the next twelve months. This amount represents a decrease in UTBs comprised of items related to the lapse of statutes of limitations. For the three month period ended March 31, 2012, the Company’s liability for UTBs increased by $1.2 million, including interest and penalties of $0.9 million. For the two month period ended April 2, 2011, the Company’s UTBs increased by $0.9 million, including interest and penalties of $0.5 million. For the one month period ended January 28, 2011, the Company’s UTBs increased by $1.5 million, including interest and penalties of $1.1 million. The Company continues to recognize interest and/or penalties related to income taxes as a component of income tax expense. Management’s judgment is required in determining and evaluating tax positions. Although management believes its tax positions and related provisions reflected in the consolidated financial statements are fully supportable, it recognizes that these tax positions may be challenged by various tax authorities. These tax positions are continuously reviewed and are adjusted as additional information becomes available that may change management’s judgment. Changes in the status of on-going tax examinations, interpretations of tax law, case law, statutes of limitations expiration and IRS rulings may all be considered in the continuous analysis. The major jurisdictions where the Company, or its subsidiaries, files income tax returns include the U.S., Argentina, Canada, China, Colombia, France, Germany, Mexico, The Netherlands, and Spain. The U.S. federal income tax returns have been examined through fiscal 2004 and the foreign jurisdictions generally remain open and subject to examination by the relevant tax authorities for the tax years 2003 through 2011. Although the current tax audits related to open tax years have not been finalized, management believes that the ultimate outcomes will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |