Note 6 - Income Taxes

9 Months Ended

Sep. 24, 2016

6.	Income Taxes

Ordinarily, interim tax provisions are calculated using the estimated effective tax rate (“ETR”) expected to be applicable for the full fiscal year. However, when a reliable estimate of the annual ETR cannot be made, the actual ETR for the year-to-date period may be the best estimate of the annual ETR. For the three and nine months ended September 24, 2016 and September 26, 2015, we used the actual year-to-date ETR in computing our tax provision, as a reliable estimate of the annual ETR cannot be made, since relatively small changes in our projected income produce a significant variation in our ETR.

The actual year-to-date ETR on income from continuing operations for the three months ended September 24, 2016 and September 26, 2015

, was 79.6% and 41.3%, respectively.

The actual year-to-date ETR on income from continuing operations for the nine months ended September 24, 2016 and September 26, 2015

, was 65.4% and 39.1%, respectively.

The tax provision on income from continuing operations in 2016 and 2015 differs from the U.S. federal statutory rate primarily due to the lack of a benefit on our domestic losses as a result of our valuation allowance on deferred tax assets, foreign income taxed at lower rates, changes in our deferred tax asset valuation allowance, state taxes and interest related to unrecognized tax benefits.

As of September 24, 2016, $65.9 million of our cash and cash equivalents and short term-investments was held by our foreign subsidiaries. If these funds are needed for our operations in the U.S., we may be required to accrue and pay U.S. taxes if we repatriate these funds. We repatriated approximately $17 million from our Singapore subsidiary in 2016 due to the reduction in business activity of that operation. This repatriation did not result in incremental U.S. taxes due to previously taxed income, loss carryforwards and a full valuation allowance against our domestic deferred tax assets. Our intent is to continue to indefinitely reinvest the remaining funds in our foreign operations and we have no current plans that would require us to repatriate these funds to the U.S.

Other than foreign currency exchange rate changes, there was no material change to our unrecognized tax benefits and related accrued interest and penalties during the three- and nine-month periods ended September 24, 2016 and September 26, 2015.