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Income Taxes
 9 Months Ended
Jul. 01, 2011
Income Taxes  
Income Taxes
6         Income Taxes

The Company's effective tax rate for the three months ended July 1, 2011 was 10.8% compared to 8.7% in the corresponding period of the prior year. During the third quarter of fiscal year 2011, the Company recognized a tax expense of $988 on income before income tax of $9,106. The three month quarter-over-quarter increase in the Company's effective tax rate was primarily due to tax expense incurred in local jurisdictions.
 
For the nine months ended July 1, 2011 and July 2, 2010, the Company's effective income tax rate attributable to earnings before income taxes was 9.8% and 10.2%, respectively.  During the nine months ended July 1, 2011, the Company recorded a decrease in the valuation allowance of $5,350 predominantly against the U.S. net deferred tax assets resulting in zero U.S. federal tax expense for businesses in the U.S.  During the nine months ended July 1, 2011, the Company continued to maintain a valuation allowance in the U.S., Japan, Italy, Spain, and the United Kingdom. The Company would ordinarily recognize a tax expense/benefit on operating income/loss in these jurisdictions; however, due to the recent cumulative losses for book purposes and the uncertainty of the realization of certain deferred tax assets in these jurisdictions, the Company continues to adjust its valuation allowances resulting in effectively no recorded federal tax expense or benefit in these jurisdictions.
 
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions is as follows:
 
Balance at October 2, 2009
   $ 1,290  
Gross increases - tax positions in current period
     205  
Lapse of statute of limitations
     (240 )
Balance at October 1, 2010
     1,255  
Gross increases - tax positions in prior period
     135  
Gross increases - tax positions in current period
     162  
Settlements
     (303 )
Lapse of statute of limitations
     (95 )
Balance at July 1, 2011
   $ 1,154  
 
As of July 1, 2011, the Company's total gross liability for unrecognized tax benefits was $1,154, including $238 of accrued interest. There was a net decrease in unrecognized tax benefits of ($95) during the second quarter of fiscal 2011 due to the lapse of jurisdictional statute of limitations provisions and a net decrease in unrecognized tax benefits of ($168) during the first quarter of fiscal 2011 due to the Company's German tax audit settlement.  The Company believes that its unrecognized tax benefits will not change significantly within the next twelve months.
 
In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Interest of $20 and $24 was recorded as a component of income tax expense in the accompanying condensed consolidated statements of operations for the three months ended July 1, 2011 and July 2, 2010, respectively.
 
The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions.  In the Company's fiscal 2011 second quarter, it completed an audit from the German tax authorities for the tax years 2005 through 2008.  The following tax years remain subject to examination by the respective tax jurisdictions:

 
Jurisdiction
Fiscal Years
  
 
United States
2007-2010
  
 
Canada
2004-2010
  
 
France
2006-2010
  
 
Germany
2009-2010
  
 
Italy
2004-2010
  
 
Japan
2007-2010
  
 
Switzerland
1999-2010