H.	Income Taxes

For the quarters ended

September 29, 2017

and

September 30, 2016,

the Company

’s effective income tax rate was

371.8%

and

28.3%

respectively. The release of the valuation allowance in a certain foreign jurisdiction of

$3,803

impacted the effective tax rate by

303.5%.

Additional tax credits of

$308

were generated, which increased the effective tax rate by

20.3%.

The mix of earnings by jurisdiction resulted in additional rate benefit of

$461,

impacting the effective tax rate by

30.5%.

The Company maintains valuation allowances when it is more likely than

not

that all or a portion of a deferred tax asset will

not

be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, the Company takes into account such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. Due to operational changes

that have occurred during the quarter, the Company updated its evaluation of the realizability of the net deferred tax assets related to that certain foreign jurisdiction. Based on this evaluation, along with expected future earnings, management has concluded that the valuation allowance is

longer appropriate and it was released during the

first

quarter of fiscal

2018.

The Company has

not

provided for additional U.S. income taxes on cumulative earnings of consolidated foreign subsidiaries that are considered to be reinvested indefinitely. The Company reaffirms its position that these earnings remain permanently invested. Such earnings could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation.

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. Under this effective tax rate methodology, the Company applies an estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter.

The Company has approximately $

888

of unrecognized tax benefits, including related interest and penalties, as of

September 29, 2017

which, if recognized, would favorably impact the effective tax rate. There was

significant change in the total unrecognized tax benefits due to the settlement of audits, the expiration of statutes of limitations or for other items during the quarter ended

September 29, 2017.

It is possible that the amount of unrecognized tax benefits could change in the next

twelve

months due to on-going audit activity.

Annually, the Company files income tax returns in various taxing jurisdictions inside and outside the United States. In general, the tax years that remain subject to examination are

2011

through

2017

for the major operations in Italy, Canada, Belgium, and Japan. The tax years open to examination in the U.S. are for years subsequent to fiscal

2015.

The state of Wisconsin income tax audit remains ongoing for the fiscal years

2010

through

2015.

During the quarter the company finalized a U.S. Federal Income tax audit for the fiscal year

2015

with

adjustment. It is reasonably possible that other audit cycles will be completed during fiscal

2018.