Note 7 - Income Taxes

9 Months Ended

Sep. 28, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. 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 28, 2019,

we used the actual year-to-date ETR in computing our tax provision, as a reliable estimate of the

2019

annual ETR cannot be made, since relatively small changes in our projected income produce a significant variation in our ETR. In computing the tax provision for the

three

and

nine

months ended

September 29, 2018,

we used the ETR expected to be applicable for the full fiscal year. The ETR on income or loss from continuing operations for the

three

months ended

September 28, 2019

and

September 29, 2018

was (

13.9

)% and

32.4%,

respectively, and (

0.3

)% and

21.9%

for the

nine

months ended

September 28, 2019

and

September 29, 2018,

respectively. The tax provision on income or loss from continuing operations in

2019

and

2018

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

Our German subsidiary’s income tax returns for

2012

to

2016

are currently under routine examination by tax authorities in Germany. We believe our financial statement accruals for income taxes are appropriate.

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 28, 2019

and

September 29, 2018.