6Income Taxes

For the three and six months ended April 1, 2016 and April 3, 2015, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:



	Three Months Ended				Six Months Ended
	April 1		April 3		April 1		April 3
(thousands, except tax rate data)	2016		2015		2016		2015
Profit (loss) before income taxes	$	14,669	$	6,820	$	14,150	$	(104)
Income tax expense		5,348		3,174		5,363		444
Effective income tax rate		36.5%		46.5%		37.9%		-426.9%

The change in the Company’s effective tax rate for the three months ended April 1, 2016 versus the prior year three month period was due to variances in income for entities with a valuation allowance and the unfavorable discrete state tax expense items recorded in the prior year three month period.

The change in the Company’s effective tax rate for the six months ended April 1, 2016 versus the prior year to date period was primarily due to the impact of positive earnings in the current year periods compared to negative earnings in the prior year to date period.

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 April 1, 2016 and April 3, 2015 were:



April 1		April 3
2016		2015
	Australia		France
	France		Indonesia
	Japan		Italy
	Netherlands		Japan
	New Zealand		Netherlands
	Spain		New Zealand
	Switzerland		Spain

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 and Germany. 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

Pursuant to ASU No. 2015-17, the Company reclassified current deferred tax assets of $8,613 and $10,649 to non-current deferred tax assets, as of April 3, 2015 and October 2, 2015, respectively. See “Note 14 – New Accounting Pronouncements” for additional information.