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Note 14 - Income Taxes | 12 Months Ended
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Jun. 24, 2012
Income Tax Disclosure [Text Block] | 14. Income Taxes The components of income (loss) before income taxes consist of the following:
| For the Fiscal Years Ended |
| June 24, 2012 |  | June 26, 2011 |  | June 27, 2010 |
United States |  | $ | 3,010 |  |  | $ | 14,737 |  |  | $ | (4,399 | )
Foreign |  |  | 5,839 |  |  |  | 17,685 |  |  |  | 22,770 |
|  | $ | 8,849 |  |  | $ | 32,422 |  |  | $ | 18,371 |
The components of the (Benefit) provision for income taxes consist of the following:
|  | For the Fiscal Years Ended |
|  | June 24, 2012 |  |  | June 26, 2011 |  |  | June 27, 2010 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 457 |  |  | $ | 3 |  |  | $ | (48 | )
State |  |  | 69 |  |  |  | — |  |  |  | — |
Foreign |  |  | 4,549 |  |  |  | 6,844 |  |  |  | 8,325 |
|  |  | 5,075 |  |  |  | 6,847 |  |  |  | 8,277 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,733 | ) |  |  | — |  |  |  | — |
State |  |  | (3,285 | ) |  |  | — |  |  |  | — |
Foreign |  |  | (1,036 | ) |  |  | 486 |  |  |  | (591 | )
|  |  | (7,054 | ) |  |  | 486 |  |  |  | (591 | )
(Benefit) provision for income taxes |  | $ | (1,979 | ) |  | $ | 7,333 |  |  | $ | 7,686 |
The significant components of the Company’s deferred tax assets and liabilities consist of the following:
|  | June 24, 2012 |  |  | June 26, 2011 |
Deferred tax assets: |  |  |  |  |  |
Investments in unconsolidated affiliates |  | $ | 9,109 |  |  | $ | 11,918 |
State tax credits |  |  | 343 |  |  |  | 510 |
Accrued liabilities and valuation reserves |  |  | 4,523 |  |  |  | 4,629 |
Net operating loss carryforwards |  |  | 10,135 |  |  |  | 19,828 |
Intangible assets |  |  | 6,961 |  |  |  | 7,797 |
Foreign tax credits |  |  | 2,588 |  |  |  | 9,757 |
Incentive compensation plans |  |  | 2,574 |  |  |  | 1,784 |
Other items |  |  | 3,112 |  |  |  | 3,052 |
Total gross deferred tax assets |  |  | 39,345 |  |  |  | 59,275 |
Valuation allowance |  |  | (13,911 | ) |  |  | (30,164 | )
Net deferred tax assets |  |  | 25,434 |  |  |  | 29,111 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 9,218 |  |  |  | 13,006 |
Unremitted foreign earnings |  |  | 7,109 |  |  |  | 12,264 |
Other |  |  | 804 |  |  |  | 2,421 |
Total deferred tax liabilities |  |  | 17,131 |  |  |  | 27,691 |
Net deferred tax asset |  | $ | 8,303 |  |  | $ | 1,420 |
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of taxable temporary differences, taxable income in carryback years, projected future taxable income and tax planning strategies in making this assessment. At the beginning of the fourth quarter of fiscal year 2012, the Company’s valuation allowance related primarily to its deferred tax assets for domestic federal and state net operating loss carryforwards, equity investments and foreign tax credit carryovers and foreign net operating loss carryforwards and equity investments. The Company’s domestic operations have experienced positive operating results in recent years (for both reported book and taxable income amounts) and the Company projects taxable income for future years due, in part, to the expected reductions in interest expense as a result of the recently completed debt refinancing. The Company will need to generate future taxable income of $21,826 prior to the expiration of the federal net operating loss carryforwards in 2030 in order to fully realize the domestic deferred tax assets. During the fourth quarter of fiscal year 2012, the Company concluded that its cumulative profitability in recent years and projected future taxable income provided sufficient positive evidence that future tax benefits related to $6,256 of its domestic deferred tax assets will more likely than not be realized and the Company recorded a reduction to the valuation allowance. Of this amount, $6,017 was recorded as a benefit for deferred income taxes as a component of net income and $239 was recorded as a component of other comprehensive income. The balances and activity for the Company’s deferred tax valuation allowance are as follows:
|  | For the Fiscal Years Ended |
|  | June 24, 2012 |  |  | June 26, 2011 |  |  | June 27, 2010 |
Balance at beginning of the year |  | $ | (30,164 | ) |  | $ | (39,988 | ) |  | $ | (40,118 | )
Charged to costs and expenses |  |  | 15,847 |  |  |  | 8,815 |  |  |  | (3,574 | )
Charged to other accounts |  |  | 239 |  |  |  | — |  |  |  | — |
Deductions |  |  | 167 |  |  |  | 1,009 |  |  |  | 3,704 |
Balance at end of year |  | $ | (13,911 | ) |  | $ | (30,164 | ) |  | $ | (39,988 | )
As of June 24, 2012, the Company’s valuation allowance includes $11,194 for reserves against certain domestic deferred tax assets primarily related to equity investments and foreign tax credit carryforwards as well as $2,717 for reserves against certain deferred tax assets of the Company’s foreign subsidiaries that are primarily related to net operating loss carryforwards and equity investments. During fiscal year 2012, the Company’s valuation allowance declined $16,253. This decrease consists of the $6,256 reduction discussed above, $11,242 primarily due to the utilization of domestic federal and state net operating loss carryforwards during the year, partially offset by $1,245 related to certain foreign equity investments. In fiscal year 2011, the valuation allowance decreased $9,824 primarily as a result of the decrease in temporary differences, the effects of the change in the indefinite reinvestment assertion, and the utilization of federal net operating loss carryforwards. In fiscal year 2010, the valuation allowance decreased $130 primarily as a result of a decrease in temporary differences and the expiration of state income tax credit carryforwards which were offset by an increase in federal net operating loss carryforwards. During fiscal year 2011, the Company changed its indefinite reinvestment assertion related to approximately $26,630 of the earnings and profits held by Unifi do Brazil, Ltda. (“UDB”). During fiscal year 2012, the Company increased its indefinite reinvestment assertion by $17,040 and subsequently reduced the assertion by $23,359 for dividends received from UDB. At the end of fiscal year 2012, the Company has plans to repatriate $20,311 of future cash flows generated from its operations in Brazil and has established a deferred tax liability of $7,109 to reflect the additional income tax that would be due as a result of these plans. As of June 24, 2012, the $74,783 of undistributed earnings of the Company’s foreign subsidiaries is deemed to be permanently invested and any applicable U.S. federal income taxes and foreign withholding taxes have not been provided on these earnings. If these earnings had not been permanently reinvested, deferred taxes of approximately $26,174 would have been recognized. The provision for income taxes computed by applying the federal statutory tax rate as reconciled to the actual (benefit) provision for income taxes is as follows:
|  | For the Fiscal Years Ended |
|  | June 24, 2012 |  |  | June 26, 2011 |  |  | June 27, 2010 |
Federal statutory tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal tax benefit |  |  | 0.5 |  |  |  | 1.1 |  |  |  | (0.4 | )
Foreign income taxed at different rates |  |  | (7.3 | ) |  |  | (1.2 | ) |  |  | (5.6 | )
Repatriation of foreign earnings |  |  | 71.6 |  |  |  | 6.3 |  |  |  | 8.4 |
Unremitted foreign earnings, net of foreign tax credit |  |  | 54.2 |  |  |  | 11.9 |  |  |  | — |
North Carolina investment tax credit expiration |  |  | 0.3 |  |  |  | 2.8 |  |  |  | 5.2 |
Change in valuation allowance |  |  | (180.2 | ) |  |  | (34.8 | ) |  |  | (0.4 | )
Nondeductible expenses and other |  |  | 3.5 |  |  |  | 1.5 |  |  |  | (0.4 | )
Effective tax rate |  |  | (22.4 | %) |  |  | 22.6 | % |  |  | 41.8 | %
The Company’s effective tax rate for the year ended June 24, 2012 was significantly impacted by the decrease in the valuation allowance due to the $6,017 reversal and the utilization of federal and state net operating loss carryforwards during the year, partially offset by the current year repatriation of foreign earnings as well as the tax effect of changes in future repatriation plans. As of June 24, 2012, the Company has $21,038 of federal net operating loss carryforwards and $36,778 of state net operating loss carryforwards that may be used to offset future taxable income. In addition, the Company has $2,588 of foreign tax credit carryforwards (of which $1,680 are offset by valuation allowances), $167 of federal tax credit carryforwards and $185 of North Carolina investment tax credit carryforwards. These carryforwards, if unused, will expire as follows:
Federal net operating loss carryforwards | 2029 | through | 2030
State net operating loss carryforwards | 2013 | through | 2032
Foreign tax credit carryforwards | 2021 |  |
Federal tax credit carryforwards | 2022 | through | 2032
North Carolina investment tax credit carryforwards | 2013 | through | 2016
The Company also has an alternative minimum tax credit carryforward of approximately $541 for federal income tax purposes that does not expire. A reconciliation of beginning and ending gross amounts of unrecognized tax benefits is as follows:
|  | For the Fiscal Years Ended |
|  | June 24, 2012 |  |  | June 26, 2011 |  |  | June 27, 2010 |
Balance at beginning of the year |  | $ | 775 |  |  | $ | 374 |  |  | $ | 2,167 |
Gross increases related to current period tax positions |  |  | 6 |  |  |  | 22 |  |  |  | — |
Gross increases related to tax positions in prior periods |  |  | 400 |  |  |  | 379 |  |  |  | — |
Gross decreases related to settlements with tax authorities |  |  | — |  |  |  | — |  |  |  | — |
Gross decreases related to lapse of applicable statute of limitations |  |  | (27 | ) |  |  | — |  |  |  | (1,793 | )
Balance at end of year |  | $ | 1,154 |  |  | $ | 775 |  |  | $ | 374 |
Recognition of $1,154 of previously unrecognized tax benefits would have an impact on the Company’s effective tax rate. Interest and penalties recognized by the Company within income tax expense were $9, $552 and $0 for the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010, respectively. The Company has $561 and $552 accrued for interest and/or penalties related to uncertain tax positions as of June 24, 2012 and June 26, 2011, respectively. The Company and its domestic subsidiaries file a consolidated federal income tax return as well as income tax returns in numerous state and foreign jurisdictions. The tax years subject to examination vary by jurisdiction. The Company regularly assesses the outcomes of both completed and ongoing examinations to ensure that the Company’s provision for income taxes is sufficient. Currently, the Company is subject to income tax examinations for U.S. federal income taxes for fiscal years 2006 through 2012, for foreign income taxes for tax years 2002 through 2012, and for state and local income taxes for tax years 2002 through 2012. During the fourth quarter of fiscal year 2012, the Internal Revenue Service notified the Company of its intent to audit the 2010 tax year.

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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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