Note 14 - Income Taxes

12 Months Ended

Dec. 28, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. Income Taxes

Domestic and foreign income (loss) before income taxes is as follows (in thousands):

Federal, state and foreign income tax (benefit) expense consists of the following (in thousands):
Current:
Federal	$	8,265	$	5,934		$	6,663
State		2,084		1,217			1,647
Foreign		18,462		20,230			21,130
Subtotal		28,811		27,381			29,440
Deferred:
Federal and State		3,251		(6,115	)		(700	)
Foreign		3,389		3,454			(663	)
Subtotal		6,640		(2,661	)		(1,363	)
Provision for income taxes	$	35,451	$	24,720		$	28,077

A reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below (in thousands):

	2013			2012			2011
Tax expense at statutory rate of 35%	$	43,481		$	35,018		$	40,284
State and local taxes, net of federal tax benefit		1,076			536			1,484
Foreign income tax rate differential		(15,497	)		(11,146	)		(13,052	)
Capital loss valuation allowance		6,085			—			—
Tax on unremitted earnings		(349	)		—			(254	)
Other, net		655			312			(385	)
Provision for income taxes	$	35,451		$	24,720		$	28,077

Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the company’s assets and liabilities. Significant components of the company’s deferred tax assets and liabilities at December 28, 2013 and December 29, 2012, are as follows (in thousands):

	2013			2012
Deferred tax assets:
Accrued expenses	$	16,958		$	21,308
Foreign tax credit carryforwards		6,263			9,638
R&D credit carryforwards		147			147
AMT credit carryforwards		1,128			1,306
Accrued restructuring		45			310
Equity investments		—			2,787
Capital losses		6,085			—
Domestic and foreign net operating loss carryforwards		890			2,330
Gross deferred tax assets		31,516			37,826
Less: Valuation allowance		(6,250	)		(784	)
Total deferred tax assets		25,266			37,042
Deferred tax liabilities:
Tax depreciation and amortization in excess of book		21,525			16,713
Other		—			349
Total deferred tax liabilities		21,525			17,062
Net deferred tax assets	$	3,741		$	19,980

The deferred tax asset valuation allowance is related to a U.S. capital loss carryover which is not expected to be realized and certain foreign net operating losses. The remaining domestic and foreign net operating losses either have no expiration date or are expected to be utilized prior to expiration. The foreign tax credit carryforwards begin to expire in 2018. The company paid income taxes of approximately $30.4 million, $23.8 million and $27.1 million in 2013, 2012 and 2011, respectively.

U.S. income taxes were not provided on a cumulative total of approximately $288.1 million of undistributed earnings for certain non-U.S. subsidiaries as of December 28, 2013, and accordingly, no deferred tax liability has been established relative to these earnings. The determination of the deferred tax liability associated with the distribution of these earnings is not practicable. The company has three subsidiaries in China on “tax holidays.” The “tax holidays” begin to expire over the next two years if the company is not granted extensions which are in process. Such “tax holidays” contributed approximately $3.2 million in tax benefits ($0.14 per diluted share) during 2013 with similar amounts expected in future years while “tax holidays” are in effect.

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 28, 2013, December 29, 2012 and December 31, 2011 is as follows (in thousands):

Balance at January 2, 2011	$	112
Increases/decreases for tax positions taken in the current year		—
Additions for tax positions taken in prior years		—
Settlements		—
Lapses of statute of limitations		—
Balance at December 31, 2011, December 29, 2012 and December 28, 2013	$	112

The amount of unrecognized tax benefits at December 28, 2013 was approximately $0.1 million. Of this total, approximately $0.1 million represents the amount of tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The company does not reasonably expect a decrease in unrecognized tax benefits in the next 12 months. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The U.S. federal statute of limitations remains open for 2010 onward. Foreign and U.S. state statute of limitations generally range from three to seven years. The company is currently under examination in Illinois for tax years 2010 through 2011. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding the Illinois tax audit. The company acquired a subsidiary during 2013 that is currently under audit in Germany for the tax years 2008 through 2010. The company is indemnified for any tax liabilities incurred upon conclusion of this audit.

The company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense.