Income Taxes

12 Months Ended

Apr. 02, 2011


9.	INCOME TAXES

Domestic and foreign income before provision for income tax is as follows:


	April 2,		April 3,		March 28,
	2011		2010		2009
	(In thousands)

Domestic	$	58,040	$	42,259	$	55,240
Foreign	$	52,041	$	39,011	$	29,762

Total	$	110,081	$	81,270	$	85,002

The income tax provision contains the following components:


	April 2,		April 3,			March 28,
	2011		2010			2009
	(In thousands)

Current
Federal	$	14,982	$	10,088		$	16,809
State		2,111		887			1,768
Foreign		7,226		9,333			5,476

Total current	$	24,319	$	20,308		$	24,053

Deferred
Federal		4,931		4,103			1,779
State		438		259			(1	)
Foreign		413		(1,770	)		(133	)

Total deferred	$	5,782	$	2,592		$	1,645

Total	$	30,101	$	22,900		$	25,698

Included in the federal income tax provisions for fiscal years 2011, 2010 and 2009 are approximately $10.8 million, $8.1 million and $6.8 million, respectively, provided on foreign source income of approximately $31.0 million, $23.2 million and $19.6 million for fiscal year 2011, 2010 and 2009, respectively, for taxes which are payable in the United States.

Tax affected, significant temporary differences comprising the net deferred tax asset are as follows:


	April 2,			April 3,
	2011			2010
	(In thousands)

Depreciation	$	(9,447	)	$	(8,317	)
Amortization		(20,597	)		(14,995	)
Inventory		2,244			1,169
Hedging		1,120			(1,329	)
Accruals and reserves		5,950			9,419
Net operating loss carryforward		7,241			6,904
Stock Based Compensation		7,725			8,226
Tax credit carryforward, net		1,583			1,594

Gross Deferred Taxes		(4,181	)		2,671
Less valuation allowance	$	(3,630	)	$	(378	)

Net deferred tax asset	$	(7,811	)	$	2,293

As of April 2, 2011, the Company has approximately $9.5 million in U.S. acquisition and approximately $1.2 million in Canada acquisition related net operating loss carry forwards that it believes are more likely than not that they will be realized. The Company has established valuation allowances to reduce the value of tax assets to amounts that it deems to be realizable. The valuation allowance is made up of $0.4 million acquisition-related R&D credits and $3.2 million acquisition-related net operating losses. The net operating loss carry forwards are subject to separate limitations and will expire beginning in 2020. The Company also has $1.5 million in gross federal and state tax credits available to offset future tax.

Approximately $143 million of our foreign subsidiary undistributed earnings are deemed to be permanently reinvested outside the US. Accordingly we have not provided US income taxes on these earnings. The income tax provision from operations differs from tax provision computed at the 35% U.S. federal statutory income tax rate due to the following:


	April 2,					April 3,					March 28,
	2011					2010					2009
	(In thousands)

Tax at federal statutory rate	$	38,528		35.0	%	$	28,444		35.0	%	$	29,751		35.0	%
Domestic Manufacturing Deduction and Extraterritorial Income Exclusion		(1,120	)	(1.0	)%		(883	)	(1.1	)%		(1,396	)	(1.6	)%
Difference between U.S. and foreign tax		(8,610	)	(7.9	)%		(4,392	)	(5.4	)%		(4,267	)	(5.0	)%
State income taxes net of federal benefit		1,741		1.6	%		764		0.9	%		1,461		1.7	%
In Process Research and Dividend repatriation		(506	)	(0.5	)%		(1,574	)	(1.9	)%		(795	)	(1.0	)%
Other, net		68		0.1	%		541		0.7	%		944		1.1	%

Income tax provision	$	30,101		27.3	%	$	22,900		28.2	%	$	25,698		30.2	%

Unrecognized Tax Benefits

Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of April 2, 2011, we had $4.7 million of unrecognized tax benefits, of which $4.3 million will impact the effective tax rate, if recognized. As of April 3, 2010, we had $4.6 million of unrecognized tax benefits, of which $4.2 million will impact the effective tax rate, if recognized.

Each year the statute of limitations for income tax returns filed in various jurisdictions closes, sometimes without adjustments. During the year ended April 2, 2011 our unrecognized tax benefits were reduced by $1.6 million as a result of the expiration of the statute of limitations in several jurisdictions and settlements with taxing authorities. This was offset in part by the establishment of reserves of $1.7 million for various matters. Total unrecognized tax benefits on April 2, 2011 were $4.7 million.

The following table summarizes the activity related to our gross unrecognized tax benefits for the years ending April 3, 2010 and April 2, 2011:


	April 2,			April 3,
	2011			2010
	(In thousands)

Beginning Balance	$	4,620		$	3,890
Additions based upon positions related to the current year		20			1,722
Additions for tax positions of prior years		1,641			1,335
Reductions of tax positions		(1,042	)		—
Settlements with taxing authorities		—			(924	)
Closure of statute of limitations		(570	)		(1,403	)

Ending Balance	$	4,669		$	4,620

As of April 2, 2011 we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $0.3 million in the next twelve months, as a result of closure of various foreign statutes of limitations.

Our historic practice has been and continues to be to recognize interest and penalties related to Federal, state and foreign income tax matters in income tax expense. Approximately $0.7 million and $0.6 million was accrued for interest and penalties at April 2, 2011 and April 3, 2010, respectively and is not included in the amounts above.

We conduct business globally and, as a result, file consolidated federal and consolidated and separate state and foreign income tax returns in multiple jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world in jurisdictions including the U.S., Japan, Germany, France, the United Kingdom, and Switzerland. With few exceptions, we are no longer subject to U.S. federal, state and local, or foreign income tax examinations for years before 2007.