Income Taxes

9 Months Ended

Sep. 29, 2012

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

Provision for Income Tax

        Under ASC Topic–740-270, Interim Reporting - Income Taxes, we are required to make our best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis. An exception applied to the three and nine months ended September 29, 2012 as the Company was not able to provide a sufficiently precise forecast of taxable income for the year primarily due to the sale of the aesthetics business. The Company recorded a benefit from income taxes for continuing operations of $134 thousand and a provision for income taxes of $175 thousand for the nine months ended September 29, 2012 and October 1, 2011, respectively. The Company’s estimated annual effective tax rate for continuing operations was 24.06% and 11.55% for the nine months ended September 29, 2012 and October 1, 2011, respectively. The increase in our effective tax rate for the nine months ended September 29, 2012 was associated primarily with the decrease in income (loss) from continuing operations.

Deferred Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2011, the Company had a deferred tax asset of approximately $11.7 million which is fully offset by a valuation allowance. At September 29, 2012, management has concluded that there is no sufficient positive evidence to support the release of the valuation allowance due to its projected current year tax loss and its incapability of forecasting the income for the near future. The Company will evaluate the position on a quarterly basis.

Uncertain Tax Positions

The Company accounts for its uncertain tax positions in accordance with ASC 740. As of December 31, 2011, the Company had $1.2 million of unrecognized tax benefits which would impact the income statement if recognized.

During the first quarter of fiscal 2012, the Company incurred a tax loss from the disposal of discontinued operations and anticipates the ability to carry back the loss to 2010 and 2011 for federal income tax purpose. As a result, the Company recognized a tax benefit of $0.3 million from the release and reclassification of the ASC 740 long term liability. The Company is not aware of any other uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate during the fiscal year.

The Company files U.S. federal and state returns as well as foreign returns in France. The tax years 2001 to 2010 remain open in several jurisdictions, none of which have individual significance.