INCOME TAXES

3 Months Ended

Sep. 29, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

Income Taxes

The Company expects to repatriate a portion of its foreign earnings based on increased sales growth driving additional capital requirements domestically, cash requirements for potential acquisitions and to implement certain tax strategies. The Company currently expects to repatriate approximately $7.9 million of foreign earnings in the future. As such, these earnings would be recognized in the United States, and the Company would be subject to U.S. federal income taxes and potential withholding taxes in foreign jurisdictions. Both the domestic tax and estimated withholding tax of expected repatriation of foreign earnings have been recorded as part of deferred taxes as of September 29, 2012. All other unremitted foreign earnings are expected to remain permanently reinvested for planned fixed assets purchases in foreign locations.

The Company has available approximately $5.9 million of federal research and development tax credits. ASC 740 requires the Company to recognize in its financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities. Accordingly, as of September 29, 2012, the Company had previously recorded $2.9 million of unrecognized tax benefits associated with these federal tax credits.

The Company has a wholly owned foreign subsidiary in Mexico that utilizes certain tax credits related to production assets that currently offset all of the income tax liabilities under general Mexican income tax law. However, the Company is subject to a Mexican business flat tax called Impuesto Empresarial a Tasa Unica (IETU). The Company anticipates that it will be taxable under IETU for the foreseeable future based on projected assets used in its operations. The effect of IETU and an associated presidential decree has been included in the effective tax rate for the three months ended September 29, 2012.

The Company’s effective tax rate differs from the federal tax rate as follows (in thousands):

	Three Months Ended
	September 29, 2012			October 1, 2011
Federal income tax provision at statutory rate	$	1,897		$	514
Foreign earnings taxed at lower rates	(112		)	(45		)
Effect of foreign currency rate changes	(67		)	(258		)
Other	118			54
Income tax provision	$	1,836		$	265