Note 14 - Income Taxes

12 Months Ended

Dec. 27, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. Income Taxes

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

	2014		2013		2012
Domestic	$	35,264	$	20,254	$	17,490
Foreign		96,382		103,982		82,562
Income before income taxes	$	131,646	$	124,236	$	100,052

Federal, state and foreign income tax (benefit) expense consists of the following (in thousands):

Current:
Federal	$	8,003		$	8,265	$	5,934
State		1,275			2,084		1,217
Foreign		27,438			18,462		20,230
Subtotal		36,716			28,811		27,381
Deferred:
Federal and State		(1,513	)		3,251		(6,115	)
Foreign		(2,975	)		3,389		3,454
Subtotal		(4,488	)		6,640		(2,661	)
Provision for income taxes	$	32,228		$	35,451	$	24,720

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):

	2014			2013			2012
Tax expense at statutory rate of 35%	$	46,076		$	43,481		$	35,018
State and local taxes, net of federal tax benefit		1,186			1,076			536
Foreign income tax rate differential		(14,981	)		(15,497	)		(11,146	)
Capital loss valuation allowance		—			6,085			—
Tax on unremitted earnings		—			(349	)		—
Other, net		(53	)		655			312
Provision for income taxes	$	32,228		$	35,451		$	24,720

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 27, 2014 and December 28, 2013, are as follows (in thousands):

	2014			2013
Deferred tax assets:
Accrued expenses	$	27,088		$	16,958
Foreign tax credit carryforwards		5,299			6,263
R&D credit carryforwards		—			147
AMT credit carryforwards		167			1,128
Accrued restructuring		124			45
Capital losses		4,557			6,085
Domestic and foreign net operating loss carryforwards		525			890
Gross deferred tax assets		37,760			31,516
Less: Valuation allowance		(4,557	)		(6,250	)
Total deferred tax assets		33,203			25,266
Deferred tax liabilities:
Tax depreciation and amortization in excess of book		21,405			21,525
Total deferred tax liabilities		21,405			21,525
Net deferred tax assets	$	11,798		$	3,741

The deferred tax asset valuation allowance is related to a U.S. capital loss carryover which is not expected to be realized. 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 2019. The company paid income taxes of approximately $26.6 million, $30.4 million and $23.8 million in 2014, 2013 and 2012, respectively.

U.S. income taxes were not provided on a cumulative total of approximately $351.2 million of undistributed earnings for certain non-U.S. subsidiaries as of December 27, 2014, 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 three subsidiaries in China on “tax holidays.” The “tax holidays” begin to expire over the next year if the company is not granted extensions which are in process. The company expects to be granted extensions.

Such “tax holidays” contributed approximately $3.0 million in tax benefits ($0.13 per diluted share) during 2014 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 27, 2014, December 28, 2013 and December 29, 2012 is as follows (in thousands):

Balance at January 2, 2012	$	112
Increases/decreases for tax positions taken in the current year		—
Additions for tax positions taken in prior years		—
Settlements		—
Lapses of statute of limitations		—
Balance at December 29, 2012, December 28, 2013 and December 27, 2014	$	112

The amount of unrecognized tax benefits at December 27, 2014 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 2011 onward. Foreign and U.S. state statute of limitations generally range from three to seven years. The company received an examination notice from the Internal Revenue Service for the 2012 tax year. The company is currently under examination in Germany for tax years 2008 through 2010. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding the German tax examination. The company acquired subsidiaries during 2013 and 2014 that are currently under examination in the U.S. and Germany. The U.S. examination is for tax years 2011 and 2012 and the German examination is for the tax years 2008 through 2010. The company is indemnified for any tax liabilities incurred upon conclusion of these examinations.

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