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INCOME TAXES
6 Months Ended
Dec. 28, 2013
Income Tax Disclosure [Abstract]  
INCOME TAXES
Income Taxes
The Company expects to repatriate a portion of its foreign earnings based on increased sales growth driving additional capital requirements domestically, cash requirements for potential acquisitions and to implement certain tax strategies. The Company currently expects to repatriate approximately $9.9 million of foreign earnings in the future. As such, these earnings would be recognized in the United States, and the Company would be subject to U.S. federal income taxes and potential withholding taxes in foreign jurisdictions. Both the domestic tax and estimated withholding tax of expected repatriation of foreign earnings have been recorded as part of deferred taxes as of December 28, 2013. All other unremitted foreign earnings are expected to remain permanently reinvested for planned fixed assets purchases and improvements in foreign locations.
Mexican tax reform was signed into law in December 2013 creating a discrete benefit of approximately $1.5 million that was recognized during the second quarter as a result of a change in applicable tax regimes. In recent years, the Company had been subject to a Mexican business flat tax called Impuesto Empresarial a Tasa Unica (IETU). However, effective January 1, 2014, IETU was repealed as part of a larger reform of the Mexican tax system. The Company is now subject to the general Mexican tax regime (ISR). The effective tax rate for the six months ended December 28, 2013 is based on the anticipated annualized effects of both the IETU and ISR regimes for fiscal year 2014.
The Company has available approximately $5.3 million of gross federal research and development tax credits as of December 28, 2013. ASC 740 requires the Company to recognize in its financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities. Accordingly, as of December 28, 2013, the Company has recorded $3.1 million to date of gross unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $2.2 million.