Note 11 - Income Taxes

9 Months Ended

Mar. 27, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. Income Taxes

The provision for income taxes was as follows:

	For the Three Months Ended						For the Nine Months Ended
	March 27, 2016			March 29, 2015			March 27, 2016			March 29, 2015
Provision for income taxes	$	4,166		$	2,729		$	10,194		$	10,083
Effective tax rate		31.0	%		21.9	%		30.5	%		28.3	%

The effective tax rate for the periods presented above is lower than the U.S. statutory rate due to (i) a decrease in the valuation allowance reflecting the recognition of lower taxable income versus book income for the Company’s investment in PAL (for which the Company maintains a full valuation allowance), which was partially offset by an increase in the valuation allowance for net operating losses, including Renewables (for which no tax benefit could be recognized); (ii) a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador and lower statutory tax rates in both Brazil and China) and (iii) the domestic production activities deduction. These items were partially offset by (a) state and local taxes net of the assumed federal benefit and (b) losses in tax jurisdictions for which no tax benefit could be recognized.

Additionally, the effective tax rate for the periods ended March 29, 2015 included recognition of renewable energy credits.

The audit of the 2013 tax year by the Internal Revenue Service was closed in December 2015 and did not generate a significant change in uncertain tax positions. The Company regularly assesses the outcomes of both completed and ongoing examinations to ensure that the Company’s provision for income taxes is sufficient. Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.

During the nine months ended March 27, 2016, the Company utilized foreign tax credits as a deduction by amending its 2011 federal return. Components of the Company’s deferred tax valuation allowance are as follows:

	March 27, 201 6			June 28, 2015
Investment in a former domestic unconsolidated affiliate	$	(6,399	)	$	(6,503	)
Equity-method investment in Parkdale America, LLC		(2,186	)		(3,261	)
Foreign tax credits		—			(1,680	)
Other (1)		(4,865	)		(4,162	)
Total deferred tax valuation allowance	$	(13,450	)	$	(15,606	)

(1) Other relates primarily to Renewables.