Income Taxes

9 Months Ended

Jul. 02, 2011

Income Taxes

Income Taxes

NOTE 9 - INCOME TAXES

Income tax expense for the three and nine months ended July 2, 2011 was $0.7 million and $2.2 million, respectively.  The effective tax rates for both the three and nine months ended July 2, 2011 were 3 percent.  As demonstrated in recent quarters, the Company's tax rate can vary during the year based on the mix of forecasted earnings by tax jurisdiction.  The Company currently benefits from reduced taxes in the Asia Pacific segment due to tax holidays.

Income tax expense for the three and nine months ended July 3, 2010 was $0.5 million and $1.3 million, respectively.  The effective tax rates for both the three and nine months ended July 3, 2010 were 2 percent. 

As of July 2, 2011, there was no material change in the amounts recorded for uncertain tax positions.  The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense.  The amount of interest and penalties recorded for both the three and nine months ended July 2, 2011 and July 3, 2010 was not material. 

It is reasonably possible that a number of uncertain tax positions related to federal and state tax positions may be settled within the next 12 months.  Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows.

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.  Despite recent losses in the United States tax jurisdiction, the Company has concluded that it continues to be more likely than not that the net U.S. deferred tax assets will be realized, and no valuation allowance is currently warranted.  Our net deferred tax assets as of July 2, 2011, reflect a $1.6 million valuation allowance against certain state deferred income taxes and a remaining valuation allowance of $1.0 million related to state tax deductions associated with stock-based compensation.If the United States operations continue to generate taxable losses, there may be a need to provide an additional valuation allowance on our net United States deferred tax assets.