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Income Taxes | 12 Months Ended
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Sep. 28, 2012
Income Taxes [Abstract] |
Income Taxes | 6 INCOME TAXES The U.S. and foreign income before income taxes for the respective years consisted of the following:
| 2012 | 2011 | 2010
United States | $ | 20,332 | $ | 11,133 | $ | 7,873
Foreign |  | (406) |  | 1,117 |  | 1,319
| $ | 19,926 | $ | 12,250 | $ | 9,192
Income tax expense (benefit) for the respective years consisted of the following:
| 2012 | 2011 | 2010
Current: |  |  |  |  |  |
Federal (net of tax benefit from operating loss carryforward of $3,098, $2,505 and $5,260, respectively) | $ | 828 | $ | - | $ | -
State |  | 378 |  | 642 |  | 483
Foreign |  | 1,595 |  | 2,000 |  | 1,164
Deferred |  | 6,991 |  | (23,036) |  | 1,006
| $ | 9,792 | $ | (20,394) | $ | 2,653
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at the end of the respective years are presented below:
| 2012 | 2011 |
Deferred tax assets: |  |  |  |  |  |
Inventories | $ | 3,700 | $ | 3,902 |  |
Compensation |  | 8,635 |  | 10,258 |  |
Tax credit carryforwards |  | 8,331 |  | 8,519 |  |
Goodwill and other intangibles |  | 3,181 |  | 3,639 |  |
Net operating loss carryforwards |  | 7,507 |  | 11,109 |  |
Depreciation and amortization |  | 220 |  | 751 |  |
Other |  | 5,178 |  | 5,385 |  |
Total gross deferred tax assets |  | 36,752 |  | 43,563 |  |
Less valuation allowance |  | 13,299 |  | 14,300 |  |
Deferred tax assets |  | 23,453 |  | 29,263 |  |
Deferred tax liabilities: |  |  |  |  |  |
Foreign statutory reserves |  | 694 |  | 348 |  |
Net deferred tax assets | $ | 22,759 | $ | 28,915 |  |
The net deferred tax assets are recorded in the Consolidated Balance Sheet as follows:
| 2012 | 2011 |
Current assets | $ | 8,645 | $ | 9,732 |  |
Non-current assets |  | 14,808 |  | 19,531 |  |
Non-current liabilities |  | 694 |  | 348 |  |
Net deferred tax assets | $ | 22,759 | $ | 28,915 |  |
The significant differences between the statutory federal tax rate and the effective income tax rates for the Company for the respective years shown below are as follows:
|  | 2012 | 2011 | 2010
Statutory U.S. federal income tax rate |  | 35.0 | 35.0 | 35.0
Foreign rate differential |  | (1.0) | (0.9) | (3.6)
State income tax, net of federal benefit |  | 3.1 | 4.2 | 5.3
Increase (Decrease) in valuation reserve for deferred tax assets |  | 7.1 | (211.0) | (8.1)
Other |  | 4.9 | 6.2 | 0.3
|  | 49.1 | (166.5) | 28.9
The Company’s net operating loss carryforwards and their expirations are as follows:
| State | United States | Foreign | Total
Year of expiration |  |  |  |  |  |  |  |
2013-2017 | $ | 15,606 | $ | - | $ | 2,718 | $ | 18,324
2018-2022 |  | 205 |  | - |  | 259 |  | 464
2023-2027 |  | 5,865 |  | - |  | 939 |  | 6,804
2028-2032 |  | 4,144 |  | - |  | 1,671 |  | 5,815
Indefinite |  | - |  | - |  | 11,846 |  | 11,846
Total | $ | 25,820 | $ | - | $ | 17,433 | $ | 43,253
The Company has tax credit carryforwards comprised of foreign tax credits, research and development and other state credits that begin to expire in 2020. Under generally accepted accounting principles, the Company considers at each reporting period all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed to reduce its deferred tax asset to an amount that is more likely than not to be realized. Th e determination of the need for a valuation allowance for the deferred tax assets is dependent upon management’s evaluation of both positive and negative evidence. Positive evidence includes the probability of achieving forecasted future taxable income, applicable tax strategies and assessments of the current and future economic and business conditions. Negative evidence includes the Company’s cumulative losses and expiring tax carryforwards. The change in the valuation allowance in 2012 provided a negative impact of $1,410 to the effective tax expense. The amount was primarily the result of increases in foreign valuation allowances of $1,787, which were partially offset by U.S. usage of tax attributes totaling $377. In fiscal 2012, the Company established a valuation allowance of $173 against the net deferred tax assets in the New Zealand tax jurisdiction based on a cumulative earnings deficit. Additional operating losses in France, Japan, Italy, Spain and United Kingdom also increased the valuation allowance by $1,614 in fiscal 2012. At September 30, 201 1, the Company’s federal and state deferred tax assets were comprised of future tax benefits associated with net operating loss carryforwards and future deductions and credits and, prior to a valuation allowance, totaled $34,814. Based upon future projections and the fact that the Company’s U.S. operations generated cumulative profits over the three year period ended September 30, 201 1, the Company believe d it would generate sufficient taxable income before most tax assets will expire. It therefore concluded during fiscal 2011 that a valuation allowance was no longer required for the majority of the federal deferred tax assets. The decrease in the valuation allowance in 2011, due to usage during the year and the year-end reversal, provided a benefit of $25,305 to the Company’s effective tax expense. This was partially offset by the increase in foreign valuation allowances of $2,419. In fiscal 2011 the Company established a valuation allowance of $903 against the net deferred tax assets in French tax jurisdictions based upon a cumulative earnings deficit. Additional operating losses in Japan, Italy, Spain and United Kingdom also increased the valuation allowance by $1,516 in fiscal 2011. In 2010, the valuation allowance positive impact of $744 to the effective tax expense was primarily the result of the U.S. usage of tax benefits related to net operating losses and the corresponding reversal of valuation allowances of $2,539, which were pa rtially offset by the increase in foreign valuation allowances of $1,795. In fiscal 2010 the Company established a valuation allowance of $1,020 against the net deferred tax assets in an Italian tax jurisdiction based on a cumulative earnings deficit and eliminated the valuation allowance of $75 against the net deferred tax assets in the New Zealand tax jurisdiction based on positive cumulative earnings. Continual net operating losses in Japan, Spain and United Kingdom also increased the valuation allowance by $810. Taxes paid were $3,163, $878 and $835 for 2012, 2011 and 2010, respectively. The decrease in deferred tax assets due to utilization of U.S. federal net operating loss carryforwards was $5,260, $3,135 and $3,098 for 2012, 2011 and 2010, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at October 1, 2010 | $ | 1,290
Lapse of statute of limitations |  | (240)
Gross increases - tax positions in period |  | 205
Balance at September 30, 2011 | $ | 1,255
Settlement |  | (168)
Lapse of statute of limitations |  | (122)
Gross increases - tax positions in period |  | 719
Balance at September 30, 2011 | $ | 1,684
Settlement |  | (773)
Lapse of statute of limitations |  | (123)
Gross increases - tax positions in period |  | 1,112
Balance at September 28, 2012 | $ | 1,900
Unrecognized tax benefits are included in accrued taxes in the accompanying C onsolidated B alance S heet s. 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. The total accrued interest with respect to income taxes was approximately $361 and $248 for the years ended September 28, 2012 and September 30, 2011, respectively. Interest of $113, $39 and $86 was recorded as a component of income tax expense in the accompanying Consolidated Statements of Operations during fiscal year s 2012, 2011 and 2010, respectively. The Company is currently undergoing examination in the Netherlands and Italy. There was a change in unrecognized tax benefits as a result of the settlement of a tax audit in Italy in the year ended September 28, 2012 and in Germany in the year ended September 30, 2011. The amount of unrecognized tax benefits recognized within the next twelve months may decrease due to expiration of the statute of limitations for certain years in various jurisdictions. H owever, it is possible that a jurisdiction may open an audit prior to the statute expiring or one of the above audits may adjust the Company’s tax filings. At this time, an estimate of the range of the reasonably possible change cannot be made. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The following tax years remain subject to examination by the respective major tax jurisdictions:
Jurisdiction | Fiscal Years
United States | 2009-2012
Canada | 2008-2012
France | 2009-2012
Germany | 2009-2012
Italy | 2009-2012
Japan | 2012
Switzerland | 2002-2012
Federal and state income taxes are provided on foreign subsidiary income distributed to, or taxable in, the U.S. during the year. In 2010, the Company reversed $2,900 of U.S. tax on undistributed earnings of its Canadian subsidiary considered not permanently reinvested as a result of attributed dividend repatriation. As of September 28, 2012, net undistributed earnings of foreign subsidiaries totaled approximately $113,031. The Company considers these unremitted earnings to be permanently invested abroad and no provision for federal or state income taxes has been made on these amounts. In the future, if foreign earnings are returned to the U.S., additional tax may result, although the calculation of such additional taxes is not practical at this time. As of September 28, 2012, the Company held approximately $46,400 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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