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Note 6 - Income taxes
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Sep. 30, 2012
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| Income Tax Disclosure [Text Block] |
6. Income
taxes
During
the three months ended September 30, 2012 the Company
recorded a net income tax recoverable of $78 related to a
recovery of $360 due to a revision of prior period estimates
for US alternative minimum taxes offset by taxes on profits
and foreign exchange in certain jurisdictions of $282. During
the three months ended October 2, 2011, the Company recorded
a net income tax expense of $172, primarily related to
minimum taxes and taxes on profits in certain jurisdictions,
combined with foreign exchange revaluation. During the nine
months ended September 30, 2012 the Company recorded a
recovery of $210 due to a revision of prior year estimates
for US alternative minimum tax offset by taxes on profits in
certain jurisdictions of $538. During the nine
months ended October 1, 2011 the Company recorded a net
income tax expense of $505 primarily related to minimum taxes
and taxes on profits in certain jurisdictions, combined with
foreign exchange revaluation.
At
January 1, 2012, the Company had total net operating loss
(“NOL”) carry forwards of $107,833, which will
expire in the years presented below:
At
September 30, 2012 and January 1, 2012, the Company had gross
unrecognized tax benefits of $279 and $274, respectively,
which if recognized, would favorably impact the
Company’s effective tax rate in future periods. The
change during the period relates to foreign exchange
revaluation of existing uncertain tax positions. The Company
does not expect any of these unrecognized tax benefits to
reverse in the next twelve months.
Tax
years 2008 to 2011 remain open for review by the tax
authorities in Canada. Tax years 2004 and 2008 to 2011 remain
open in the United States.
The
Company accounts for interest and penalties related to
unrecognized tax benefits in income tax expense based on the
likelihood of the event and its ability to reasonably
estimate such amounts. The Company has approximately $61 and
$48 accrued for interest and penalties as of September 30,
2012 and January 1, 2012, respectively. The change is
primarily due to the recording of incremental interest on
existing uncertain positions for the period and foreign
exchange revaluation.
In
assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some
portion or all of its deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income.
Management considers the scheduled reversal of deferred tax
liabilities, change of control limitations, projected future
taxable income and tax planning strategies in making this
assessment. Guidance under ASC 740, “Income
Taxes”, states that forming a conclusion that a
valuation allowance is not needed is difficult when there is
negative evidence, such as cumulative losses in recent years
in the jurisdictions to which the deferred tax assets relate.
At the end of the second quarter of 2003, the Company
concluded that given the weakness and uncertainty in the
economic environment at that time, it was appropriate to
establish a full valuation allowance for the deferred tax
assets. Commencing in 2004, it was determined by management
that it was more likely than not that the deferred tax assets
associated with the Mexican jurisdiction would be realized
and no valuation allowance has been recorded against these
deferred tax assets since 2004. In 2010, it was
determined by management that it was more likely than not
that certain deferred tax assets associated with the U.S.
jurisdiction would be realized and no valuation allowance has
been recorded against these deferred tax assets. The Canadian
jurisdiction continues to have a full valuation allowance
recorded against the deferred tax assets.
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