Provision for Income Taxes

9 Months Ended

Aug. 28, 2011

Income Tax Disclosure [Abstract]

Provision for Income Taxes [Text Block]

PROVISION FOR INCOME TAXES

Income taxes decreased to a benefit of $1,743,000 in the third quarter of 2011, from a provision of $1,349,000 in the same period of 2010.  Income taxes decreased to a benefit of $2,553,000 in the first nine months of 2011, from a provision of $4,008,000 in the comparable period in 2010. The effective rate in 2010 was reduced by tax benefits recorded in the third quarter of 2010, including a $599,000 decrease in the valuation allowance against deferred assets related to delayed bonuses and restricted stock and a $361,000 decrease in then current taxes payable related to the same issue. The effective rate in 2011 was reduced by tax benefits of $2,430,000 recorded in the second and third quarters associated with tax years no longer subject to audit and additional state tax credits. The effective tax rate increased to 135% in the first nine months of 2011, up from 16% in the first nine months of 2010.  Excluding discrete items, the effective tax rates for the first nine months of 2011 and 2010 were based on forecasted full-year earnings and the anticipated mix of domestic and foreign earnings.  Income from certain foreign operations and affiliated companies is taxed at rates that are lower than the U.S. statutory tax rates.  The effective tax rates for interim periods are not necessarily indicative of the tax rates for the full fiscal year.

At August 28, 2011, the total amount of gross unrecognized tax benefits, excluding interest, was $9,956,000.  This amount is not reduced for offsetting benefits in other tax jurisdictions and for the benefit of future tax deductions that would arise as a result of settling such liabilities as recorded.  Of this amount, $4,110,000 would reduce the Company's income tax expense and effective tax rate, after giving effect to offsetting benefits from other tax jurisdictions and resulting future deductions.  At November 30, 2010, the total amount of gross unrecognized tax benefits, excluding interest, was $11,452,000.

The Company anticipates that it is reasonably possible that the total amount of unrecognized tax benefits may significantly change within the succeeding 12 months as a result of the expiration of certain federal, state and foreign statutes of limitations and the settlement of certain state audits.  The Company estimates that these events could reasonably result in a possible decrease in unrecognized tax benefits of $665,000.

The Company accrues interest and penalties related to unrecognized tax benefits as income tax expense.  Accruals totaling $854,000 were recorded as a liability in the Company's consolidated balance sheet at August 28, 2011, compared to $1,153,000 as of November 30, 2010.

The Company's federal income tax returns remain subject to examination for the 2008 and forward tax years.  The Company files multiple state income tax returns, including returns for California, Hawaii, Arizona and Texas, with open statutes for all years from 2005.  The Company also files multiple foreign income tax returns and remains subject to examination in certain foreign jurisdictions, including the Netherlands, Singapore and Malaysia, for all years from 2003.