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Table of Contents
carryforwards of $564,000 as of December 31, 2009 that resulted from limitations on use imposed by the State of California. The federal losses
expire in different years beginning in fiscal 2021. The state loss begins to expire in fiscal 2014. The state tax credit carry-forward has no
expiration.
The Company files income tax returns in the U.S. federal jurisdiction, various state and local, and foreign jurisdictions. With few
exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations for years before 2005. The
Company has limited audit activity in various states and foreign jurisdictions. Currently the Company does not expect a material change in
unrecognized tax benefits to occur during the next 12 months.
The Company adopted the provisions of updated guidance for income taxes on January 1, 2007. A reconciliation of the beginning and
ending amount of gross unrecognized tax benefits (“UTB”) is as follows (in millions):
The total amount of net unrecognized tax benefits that, if recognized would affect the effective tax rate as of December 31, 2009 is $14.2
million. The ending net UTB results from adjusting the gross balance at December 31, 2009 for items such as U.S. federal and state deferred tax,
foreign tax credits, interest, and deductible taxes. The net UTB is included as a component of non-current income taxes payable within the
consolidated balance sheet.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the period
ended December 31, 2007, December 31, 2008 and December 31, 2009, total interest and penalties expensed were $643,000, $515,000 and
$354,000, respectively. As of December 31, 2008 and December 31, 2009, accrued interest on a gross basis was $1.2 million and $1.5 million,
respectively. No penalties have been accrued. Included in accrued interest are amounts related to tax positions for which the ultimate
deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
79
Federal,
State, and
Foreign Tax
Gross UTB Balance at January 1, 2007
$
3,428
Additions based on tax positions related to the current year
6,147
Additions for tax positions of prior years
—
Reductions for tax positions of prior years
—
Settlements
(6
)
Reductions due to lapse of applicable statutes
(233
)
Gross UTB Balance at December 31, 2007
9,336
Additions based on tax positions related to the current year
3,940
Additions for tax positions of prior years
658
Reductions for tax positions of prior years
(140
)
Settlements
—
Reductions due to lapse of applicable statutes
(503
)
Gross UTB Balance at December 31, 2008
13,291
Additions based on tax positions related to the current year
3,608
Additions for tax positions of prior years
184
Reductions for tax positions of prior years
(1
)
Settlements
—
Reductions due to lapse of applicable statutes
(581
)
Gross UTB Balance at December 31, 2009
$
16,501