Note 15 - Income Taxes

12 Months Ended

Dec. 29, 2012

Income Tax Disclosure [Text Block]

15. Income Taxes

Domestic and foreign income (loss) before income taxes is as follows (in thousands):

	2012			2011			2010
Domestic	$	17,490		$	25,206		$	15,956
Foreign		82,562			89,895			91,723
Income before income taxes	$	100,052		$	115,101		$	107,679
Federal, state and foreign income tax (benefit) expense consists of the following (in thousands):
Current:
Federal	$	5,934		$	6,663		$	2,917
State		1,217			1,647			586
Foreign		20,230			21,130			17,729
Subtotal		27,381			29,440			21,232
Deferred:
Federal and State		(6,115	)		(700	)		6,919
Foreign		3,454			(663	)		865
Subtotal		(2,661	)		(1,363	)		7,784
Provision for income taxes	$	24,720		$	28,077		$	29,016

A reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below (in thousands):

	2012			2011			2010
Tax expense at statutory rate of 35%	$	35,018		$	40,284		$	37,688
State and local taxes, net of federal tax benefit		536			1,484			420
Foreign income tax rate differential		(11,146	)		(13,052	)		(10,554	)
Tax on unremitted earnings		—			(254	)		1,267
Other, net		312			(385	)		195
Provision for income taxes	$	24,720		$	28,077		$	29,016

Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the company’s assets and liabilities. Significant components of the company’s deferred tax assets and liabilities at December 29, 2012 and December 31, 2011, are as follows (in thousands):

	2012			2011
Deferred tax assets:
Accrued expenses	$	21,308		$	15,764
Foreign tax credit carryforwards		9,638			9,627
R&D credit carryforwards		147			1,013
AMT credit carryforwards		1,306			1,318
Accrued restructuring		310			300
Equity investments		2,787			—
Domestic and foreign net operating loss carryforwards		2,330			1,608
Gross deferred tax assets		37,826			29,630
Less: Valuation allowance		(784	)		(708	)
Total deferred tax assets		37,042			28,922
Deferred tax liabilities:
Tax depreciation and amortization in excess of book		16,713			10,919
Other		349			1,917
Total deferred tax liabilities		17,062			12,836
Net deferred tax assets	$	19,980		$	16,086

The deferred tax asset valuation allowance is related to certain deferred tax assets from foreign net operating losses. The remaining domestic and foreign net operating losses either have no expiration date or are expected to be utilized prior to expiration. The foreign tax credit carryforwards begin to expire in 2018. The company paid income taxes of approximately $23.8 million, $27.1 million and $6.4 million in 2012, 2011 and 2010, respectively. U.S. income taxes were not provided on a cumulative total of approximately $220.2 million of undistributed earnings for certain non-U.S. subsidiaries as of December 29, 2012, and accordingly, no deferred tax liability has been established relative to these earnings. The determination of the deferred tax liability associated with the distribution of these earnings is not practicable. The company has two subsidiaries in China and one subsidiary in the Philippines on “tax holidays.” The “tax holidays” expire in China in two and three years and within the next one to three years in the Philippines. Such “tax holidays” contributed $2.5 million in tax benefits ($0.11 per diluted share) during 2012 with similar amounts expected in future years while “tax holidays” are in effect.

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 29, 2012, December 31, 2011 and January 1, 2011 is as follows (in thousands):

Balance at January 2, 2010	$	496
Additions for tax positions of prior years		233
Settlements		(617	)
Balance at January 1, 2011, December 31, 2011 and December 29, 2012	$	112

The amount of unrecognized tax benefits at December 29, 2012 was approximately $0.1 million. Of this total, approximately $0.1 million represents the amount of tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The company does not reasonably expect a decrease in unrecognized tax benefits in the next 12 months. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The U.S. federal statute of limitations remains open for 2009 onward. Foreign and U.S. state statute of limitations generally range from three to six years. The company is currently under examination in Texas for tax years 2007 through 2010, Singapore for tax years 2008 and 2009 and in the Philippines for the 2009 tax year. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding any audit.

The company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense.