Income Taxes

3 Months Ended

Jul. 02, 2011

Income Taxes [Abstract]

Income Taxes

Note 7 - Income Taxes

The provision for income taxes for the three months ended July 2, 2011 was $700,000 on income before tax of $2,369,000 at the effective tax rate of 30% compared to $2,175,000 on income before tax of $6,283,000 at the effective tax rate of 35% for the same period in the prior fiscal year. The year-over-year decrease in estimated tax rate for the three-month period was primarily due to reductions in state taxes and increased R&D credits.

The income tax provision for such interim periods reflects the Company's computed estimated annual effective tax rate and differs from the taxes computed at the federal and state statutory rates primarily due to the effects of foreign rate differentials, non-deductible stock-based compensation expense, tax exempt interest income, research and development tax credits, tax contingencies, and the domestic production activities deduction.

During the three months ended July 2, 2011, the liability for uncertain income tax positions excluding accrued interest and penalties increased from $4,052,000 to $4,151,000. Of the total $4,151,000 of unrecognized tax benefits, $3,320,000 represents the amount that, if recognized, would favorably affect the Company's effective income tax rate in any future period. The Company cannot conclude on the range of cash payments that will be made within the next twelve months associated with its uncertain tax positions.

The Company records interest and penalties related to unrecognized tax benefits in income tax expense. On July 2, 2011, the Company had approximately $545,000 accrued for estimated interest and $413,000 for estimated penalties related to uncertain tax positions. For the three months ended July 2, 2011, the Company recorded estimated interest of $32,000 and estimated penalties of $3,000.

The balance of unrecognized income tax benefits, including accrued interest and accrued penalties on July 2, 2011, was approximately $999,000 related to tax positions for which it is reasonably possible that the statute of limitations will expire in various jurisdictions within the next twelve months.

The Company and its subsidiary are subject to taxation in various jurisdictions, including federal, state and foreign.  The Company's major tax jurisdictions are the United States federal, State of California and Hong Kong. The Company's federal, state, and Hong Kong income tax returns are generally no longer subject to examination by taxing authorities for fiscal years before 2002.