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Income Taxes
3 Months Ended
Jun. 29, 2013
Income Taxes [Abstract]  
Income Taxes

Note 6 – Income Taxes

The income tax benefit for the three months ended June 29, 2013 was $314,000 on income before tax of $2,572,000 at the effective tax benefit rate of 12% compared to a tax provision of $229,000 on income before tax of $826,000 at the effective tax rate of 28% in the first quarter of the prior fiscal year.

The income tax benefit reported for the three months ended June 29, 2013 resulted primarily from $949,000 of income tax reserve releases due to expirations of statute of limitations on uncertain tax positions. There were no such statute of limitations expirations in the first quarter of the prior fiscal year.

The income tax benefit or provision for interim periods may not reflect 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, R&D tax credits, tax contingencies, and the domestic production activities deduction.

During the three months ended June 29, 2013,  the liability for uncertain income tax positions excluding accrued interest and penalties decreased from $3,160,000 to $2,420,000. Of the total $2,420,000 of unrecognized tax benefits, $1,768,000 represents the amount that, if recognized, would favorably affect the Company’s effective income tax rate in a 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. As of June 29, 2013, the Company had approximately $295,000 accrued for estimated interest and $159,000 for estimated penalties related to uncertain tax positions. For the three months ended June 29, 2013, the Company recorded estimated interest reduction of $143,000 and estimated penalties of $2,000.  

The balance of unrecognized income tax benefits, including accrued interest and accrued penalties on June 29, 2013, was approximately $145,000 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 Companys major tax jurisdictions are the United States federal, State of California and Hong Kong, and the Company’s income tax returns are no longer subject to examination by these taxing authorities for fiscal years before 2002.