Note 16 - Income Taxes

9 Months Ended

Dec. 29, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 16.    INCOME TAXES

During the three months ended December 29, 2013, we recorded an income tax benefit of approximately $1.4 million, which was primarily due to the lapsing of statute of limitations in federal and state jurisdictions, offset by income tax expense in certain of our non-US operations. During the nine months ended December 29, 2013, we recorded an income tax benefit of approximately $8.2 million. The income tax benefit was primarily due to the impact of the acquisition of Cadeka on Exar’s valuation allowance, the impact of which is recorded outside of purchase accounting, resulting in a release of the valuation allowance and an income tax benefit of $6.8 million. In the three and nine months ended December 30, 2012, we recorded $1.3 million each of income tax benefit which mainly resulted from the release of a $1.3 million reserve for uncertain tax positions related to an NOL carryback refund. The reserve was released due to the expiration of the statute of limitations in U.S. tax jurisdictions.

During the three and nine months ended December 29, 2013, the unrecognized tax benefits each decreased by $1.4 million to $14.0 million. The current unrecognized tax benefit was primarily related to the release of foreign liabilities and interest due to the lapse of statute of limitations and R&D credits. If recognized, $11.4 million of these unrecognized tax benefits (net of federal benefit) would be recorded as a reduction of future income tax provision before consideration of changes in the valuation allowance for deferred tax assets.

Estimated interest and penalties related to the income taxes are classified as a component of the provision for income taxes in the condensed consolidated statement of operations. Accrued interest and penalties consisted of the following as of the dates indicated (in thousands):

	December 29, 2013		March 31, 2013
Accrued interest and penalties	$	97	$	228

Our major tax jurisdictions are the United States federal and various states, Canada, China and certain other foreign jurisdictions. The fiscal years 2003 through 2013 remain open and subject to examinations by the appropriate governmental agencies in the United States and certain foreign jurisdictions.

On November 6, 2012, California passed Proposition 39, which mandates most taxpayers to apportion their California income by using a single sales factor and requires all taxpayers to use market-based sourcing for sale receipts for tax years beginning or after January 1, 2013. The enacted law did not have a material impact on our financial position, results of operations or cash flows.

Per the 2012 Tax Relief Act enacted in January 2013, the federal R&D credit is retroactively extended through 2013. No R&D credit and related reserve is considered in the third quarter of fiscal year 2014 tax provision pending improvement in our future visibility of the incremental R&D expenses. However, as a full valuation allowance is placed on the deferred tax assets, there is no impact on the statement of operations.