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Income Taxes
3 Months Ended
Aug. 30, 2014
Income Taxes [Abstract]  
Income Taxes

4. Income Taxes

The Company’s provision for income taxes was $5.3 million (effective tax rate of approximately 50%) and $3.1 million (effective tax rate of approximately 46%) for the three months ended August 30, 2014 and August 24, 2013, respectively. The Company records tax expense based upon an actual effective tax rate versus a forecasted tax rate because of the volatility in its international operations which span numerous tax jurisdictions.

The provision for income taxes in the first quarter of fiscal 2015 and 2014 results from taxes on income in the U.S. and certain other foreign jurisdictions, no benefit for losses in jurisdictions in which a full valuation allowance on operating loss carryforwards had previously been established and a lower benefit for losses in certain foreign jurisdictions with tax rates lower than the U.S. statutory rates. The increase in the effective tax rate for the three months ended August 30, 2014 results from the increased foreign losses during the quarter without any tax benefit because of valuation allowances placed on the tax assets of the foreign subsidiaries.  In addition, the period to period increase also results from the reversal of $350,000 of uncertain international tax accruals during the first quarter ended August 24, 2013.

In addition, the inability to benefit from losses in jurisdictions with a full valuation allowance and the unpredictability of the timing and amount of eligible disqualifying incentive stock option (“ISO”) exercises impact the Company’s effective tax rate. The Company cannot recognize a tax benefit for the stock compensation expense related to certain ISO exercises unless and until the holder exercises his or her option and then sells the shares within a certain period of time. Also, the Company can only recognize a potential tax benefit for employees’ acquisition and subsequent sale of shares purchased through the ESPP if the sale occurs within a certain defined period. Further, tax benefits associated with ISO grants fully vested at the date of adoption of current accounting rules for stock-based compensation will be recognized as additions to paid-in capital when and if those options are exercised and not as a reduction to the Company’s tax provision. The Company recognized a benefit of approximately $586,000 and  $590,000 related to stock-based compensation for nonqualified stock options expensed and for eligible disqualifying ISO exercises during the first quarter of fiscal 2015 and 2014, respectively.