6Income Taxes

For the three months ended January 1, 2016 and January 2, 2015, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:



	Three Months Ended
	January 1		January 2
(thousands, except tax rate data)	2016		2015
Loss before income taxes	$	(519)	$	(6,924)
Income tax expense (benefit)		15		(2,730)
Effective income tax rate		-2.9%		39.4%

The change in the Company’s effective tax rate for the three months ended January 1, 2016 versus the prior year period was primarily due to the impact of the positive earnings in tax-paying jurisdictions being less than the negative earnings in the jurisdictions the Company maintains a valuation allowances for which no tax expense or benefit is recognized.

Variances in income or loss for entities that have a valuation allowance, primarily in non-US tax jurisdictions, will drive fluctuations in the effective tax rate. The impact of the Company’s operations in these foreign locations is removed from overall effective tax rate methodology and recorded directly based on year to date results for the year for which no tax expense or benefit can be recognized. The tax jurisdictions that have a valuation allowance for the periods ended January 1, 2016 and January 2 2015 were:



January 1		January 2
2016		2015
	Japan		Japan
	France		France
	Switzerland		Indonesia
	Italy		Italy
	Netherlands		Netherlands
	New Zealand		New Zealand
	Spain		Spain
	Australia		United Kingdom

The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits due to the impact of changes in its assumptions or as a result of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities and lapses of statutes of limitation. The Company’s 2016 fiscal year tax expense is anticipated to include approximately $400 related to uncertain income tax positions.

In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized benefits as a component of income tax expense. The Company is projecting accrued interest of $200 related to uncertain income tax positions for the fiscal year ending September 30, 2016.

The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The Company is currently undergoing income tax examinations in Italy, Germany and Indonesia. As of the date of this report, the following tax years remain subject to examination by the respective tax jurisdictions:


Jurisdiction	Fiscal Years
United States	2012-2015
Canada	2011-2015
France	2011-2015
Germany	2010-2015
Italy	2010-2015
Japan	2012-2015
Switzerland	2005-2015

The Company recorded net non-current deferred tax assets of $16,457 and $13,000, as of January 1, 2016 and January 2, 2015, respectively. See “Note 14 – New Accounting Pronouncements” for additional information.