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Note 6 - Income taxes
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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| Income Tax Disclosure [Text Block] |
6. Income
taxes
During
the three months ended March 31, 2013 and April 1, 2012,
respectively, the Company recorded a net income tax expense
of $428 and $207, primarily related to minimum taxes and
taxes on profits in certain jurisdictions, combined with
foreign exchange revaluation.
At
December 30, 2012, the Company had total net operating loss
(“NOL”) carry forwards of $79,925, which will
expire in the years presented below:
At
March 31, 2013 and December 30, 2012, the Company had gross
unrecognized tax benefits of $274 and $274, respectively,
which if recognized, would favorably impact the
Company’s effective tax rate in future
periods. The Company does not expect any of these
unrecognized tax benefits to reverse in the next twelve
months.
Tax
years 2008 to 2012 remain open for review by the tax
authorities in Canada. Tax years 2004 and 2008 to 2012 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 $67 and
$64 accrued for interest and penalties as of March 31, 2013
and December 30, 2012, respectively. The change is primarily
due to the recording of incremental interest on existing
uncertain positions for the period.
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 Accounting Standards Codification
(“ASC”) 740, “Income Taxes”,
(“ASC 740”) 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 uncertainly 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 and 2012,
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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