v2.4.0.8
Income taxes
 12 Months Ended
Dec. 28, 2013
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

14. Income Taxes

The provision for income taxes from continuing operations differs from the amount that would have resulted by applying the combined Canadian federal and provincial statutory income tax rate to earnings before income taxes due to the following:

    December 28, 2013December 29, 2012December 31, 2011
    $$$
Income tax provision (recovery) at combined   
 statutory rate (232) 9,392 7,773
     
Income (decrease) by the effects of:   
 Change in valuation allowance 3,434 (1,354) (1,054)
 Impairment loss on investments 2,799 - -
 Foreign tax rate differential 2,535 2,820 824
 Change in unrecognized tax benefits 153 180 -
 Impact of substantively enacted tax rates 29 (406) 1,036
 Benefits of intercompany financing structures (626) (210) (1,231)
 Impact of foreign exchange (224) 18 194
 Impact of goodwill and intangible asset   
 Expiring non-capital losses and R&D credits   
  plus a change in Canadian capital losses - - 2,002
 Other (88) 494 352
 Provision for income taxes 7,780 10,934 9,896

The components of earnings (loss) from continuing operations before income taxes are shown below:
       
    December 28, 2013December 29, 2012December 31, 2011
    $$$
Canada (15,945) 9,070 (1,559)
U.S. 13,462 15,416 17,136
Other 1,609 10,959 12,185
     (874) 35,445 27,762
       
The components of the provision for (recovery of) income taxes are shown below:
       
    December 28, 2013December 29, 2012December 31, 2011
    $$$
Current income tax provision (recovery):   
 Canada 402 250 (468)
 U.S. 5,434 3,123 3,534
 Other 806 3,041 2,724
     6,642 6,414 5,790
     
Deferred income tax provision (recovery):   
 Canada 1,766 889 613
 U.S. (728) 3,648 3,121
 Other 100 (17) 372
    1,138 4,520 4,106
Provision for income taxes 7,780 10,934 9,896

Deferred income taxes of the Company are comprised of the following:
       
    December 28, 2013December 29, 2012December 31, 2011
    $$$
Differences in property, plant and equipment   
 and intangible assets (32,654) (33,476) (29,088)
Capital and non-capital losses 14,822 16,076 16,240
Tax benefit of scientific research expenditures 4,974 5,086 4,908
Tax benefit of costs incurred during share issuances 354 368 191
Inventory basis differences 2,106 1,944 2,423
Other accrued reserves 3,863 1,241 2,124
    (6,535) (8,761) (3,202)
Less: valuation allowance 6,535 3,145 4,547
Net deferred income tax liability (13,070) (11,906) (7,749)

The components of the deferred income tax asset (liability) are shown below:
       
    December 28, 2013December 29, 2012December 31, 2011
    $$$
Canada 6,053 7,848 11,278
U.S. (15,475) (16,721) (16,009)
Other (3,648) (3,033) (3,018)
  (13,070) (11,906) (7,749)

The components of the deferred income tax valuation allowance are as follows:
       
    December 28, 2013December 29, 2012December 31, 2011
    $$$
Balance, beginning of year 3,145 4,547 5,880
Increase (decrease) in valuation allowance 3,434 (1,354) (1,054)
Adjustments to valuation allowance as a result of   
 acquisitions and foreign exchange (44) (48) (279)
Balance, end of year 6,535 3,145 4,547

The Company has approximately $10,098 (December 29, 2012 - $10,847) in Canadian scientific expenditures, which can be carried forward indefinitely to reduce future years' taxable income. The Company also has approximately $953 and $71 (December 29, 2012 – $958 and $71) in Canadian and U.S. scientific research investment tax credits and $166 (December 29, 2012 - $166) in Massachusetts research and development tax credits, which will expire in varying amounts up to 2029.

The Company has Canadian and U.S. federal non-capital loss carry-forwards of approximately $21,581 and $5,108, respectively, as at December 28, 2013 (December 29, 2012 - $28,821 and $11,517, respectively). The Company also has state loss carry-forwards of approximately $6,576 as at December 28, 2013 (December 29, 2012 - $11,311). The amounts are available to reduce future federal and provincial/state income taxes. Non-capital loss carry-forwards attributable to Canadaand the U.S. expire in varying amounts over the next 20 years.

The Company has Canadian capital losses of approximately $394 as at December 28, 2013 (December 29, 2012 - $845) for which a full valuation allowance exists. These amounts are available to reduce future capital gains and do not expire.

 

The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In making such determinations, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Based on this evaluation, a valuation allowance of $6,535 (December 29, 2012 - $3,145) has been recorded against certain assets to reduce the net benefit recorded in the consolidated financial statements.

 

The Company has not provided Canadian deferred taxes on cumulative earnings of non-Canadian affiliates and associated companies that have been reinvested indefinitely. Deferred taxes are provided for earnings of non-Canadian affiliates and associated companies when the Company determines that such earnings are no longer indefinitely reinvested.

 

The Company believes it has adequately examined its tax positions taken or expected to be taken in a tax return; however, amounts asserted by taxing authorities could differ from the Company's positions. Accordingly, additional provisions on federal, provincial, state and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is presented below.

     December 28, 2013December 29, 2012
     $$
Balance, beginning of year 2,757 2,568
Additions based on tax positions related to the current year 153 189
Balance, end of year 2,910 2,757

The Company's unrecognized tax benefits largely include a possible reduction to prior year losses for U.S. exposures relating to the deductibility of certain interest amount accrued. The Company believes that it is reasonably possible that a decrease in unrecognized tax benefits related to tax exposures in the U.S. may be necessary as statute limitations lapse beginning in 2015.

 

Consistent with its historical financial reporting, the Company has classified interest and penalties related to income tax liabilities, when applicable, as part of interest expense in its consolidated statements of operations. The Company recognized $85 in potential interest and penalties associated with unrecognized tax benefits for the year ended December 28, 2013 (December 29, 2012 - $nil). The unrecognized tax benefits have been recorded in income taxes payable or as a reduction of long-term deferred tax assets. All of the unrecognized tax benefits could impact the Company's effective tax rate if recognized.

 

The number of years with open tax audits varies depending on the tax jurisdiction. The Company's major taxing jurisdictions include Canada (including Ontario) the U.S. (including multiple states), and the Netherlands. The Company's 2006 through 2012 tax years (and any tax year for which available non-capital loss carry-forwards were generated up to the amount of non-capital loss carry-forward) remain subject to examination by the Internal Revenue Service for U.S. federal tax purposes, and the 2006 through 2012 tax years remain subject to examination by the appropriate governmental agencies for Canadian federal tax purposes. There are other ongoing audits in various other jurisdictions that are not considered material to the Company's consolidated financial statements.