Components of earnings (loss) before income taxes are as follows (in thousands):

 

 

The provision for (benefit from) income taxes consists of the following (in thousands):

 

 

Reconciliations of expected tax expense at the U.S. statutory rate to actual tax expense (benefit) are as follows (in thousands):

 

 

 

The tax rate in fiscal is slightly higher than the U.S. statutory rate since the benefit of earnings in foreign jurisdictions with lower effective tax rates and a -time tax benefit in Canada was more than offset by discrete tax charges including the impact of a tax rate change from to in the U.K. applied to deferred tax assets which increased tax expense by million.

As a result of closing and selling the warehouse and product assembly center in Canada, the Canadian subsidiary had cash in excess of its long term needs.  Thus, there

was a dividend of million paid from the Company’s subsidiary in Canada to the U.S. parent company out of the subsidiary’s fiscal earnings. While the dividend is fully taxable in the U.S.,

the impact to tax expense was negligible due to the use of foreign tax credits.

 

The tax benefit rate of on the pre-tax loss of million in the year ended was lower than the U.S. statutory rate due primarily to losses in foreign entities for which tax benefit was taken. Substantial benefit was reflected for US federal and state income taxes primarily as a result of increases in deferred tax assets related to pension expense and the write-down of fixed assets. In fiscal several of the subsidiaries in foreign countries reported financial losses. In these cases, tax benefit from those losses was recognized and an additional valuation allowance was taken to reduce any deferred tax assets since future income is more likely than to be recognized.

 

The tax rate in fiscal was higher than the U.S. Statutory rate because of losses in foreign subsidiaries that were able to be benefitted for tax purposes. There was a dividend of million paid from the Company’s subsidiary in Brazil to the U.S. parent company out of the subsidiary’s fiscal earnings. While the dividend is fully taxable in the U.S., the impact to tax expense was negligible due to the use of foreign tax credits.  

 

Net deferred tax assets at are million. While these deferred tax assets reflect the tax effect of temporary differences between book and taxable income in all jurisdictions in which the Company has operations, the majority of the assets relate to operations in the U.S. where the Company had book losses in the current year. U.S. net deferred assets are million with a valuation allowance of million. The Company has considered the positive and negative evidence to determine the need for a valuation allowance offsetting the deferred tax assets in the U.S. and has concluded that it is more likely than that the deferred tax assets net of the recorded valuation allowance will be realized.

 

Key positive evidence considered include: a) Significant domestic book profits in and b) losses in fiscal are primarily due to -time events including a million pension expense, most of which is deductible for tax purposes until paid; c) cost saving plans are being implemented by the Company; d) prior year taxable income is available for carryback losses; e) tax planning opportunities, including an election to revoke the LIFO election; and f) forecasted domestic profits for future years. The negative evidence considered is that fiscal years and showed domestic book and tax losses.

 

A valuation allowance has been provided on foreign deferred tax assets related to foreign tax loss carryforwards (NOLs) due to the uncertainty of generating future taxable income in those jurisdictions. Similarly, a partial valuation allowance has been provided for foreign tax credit carryforwards due to the uncertainty of generating sufficient foreign source income to utilize those credits in the future.

 

In fiscal the valuation allowance decreased by million primarily due to the use of foreign net operating losses previously fully valued. This was partly offset by an increase in foreign tax credits in excess of the limitation on their use as a result of limited foreign source income. In fiscal the valuation allowance increased by million primarily due to the increase in foreign losses.

 

Deferred income taxes at and are attributable to the following (in thousands):

 

 

 

 

The Company is subject to U.S. federal income tax and various state, local and foreign income taxes in numerous jurisdictions. The Company’s domestic and international tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.

 

Reconciliations of the beginning and ending amount of unrecognized tax benefits are as follows (in thousands):

 

 

 

The long-term tax obligations as of and relate primarily to transfer pricing adjustments.  The Company has also recorded a non-current tax receivable for million and million at and respectively, representing the corollary effect of transfer pricing competent authority adjustments.

 

The Company has identified uncertain tax positions at for which it is possible that the total amount of unrecognized tax benefits will decrease within the next months by million. The Company recognizes interest and penalties related to income tax matters in income tax expense and has booked an increase of million in fiscal for interest expense.

 

The Company’s U.S. federal tax returns for years prior to fiscal are longer subject to U.S. federal examination by the Internal Revenue Service; however, tax losses carried forward from earlier years are still subject to review and adjustment. As of the Company has resolved all open income tax audits. In international jurisdictions, the years that be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the calendar years through   

 

The state tax loss carryforwards tax effected benefit of million expires at various times over the next to years. The foreign tax credit carryforward of million expires in the years through amounts expiring in the next years have a full valuation allowance against it. The research and development tax credit carryforward of million expires in the years through

 

At the estimated amount of total unremitted earnings of foreign subsidiaries is million. The Company received a cash dividend from foreign subsidiaries of million in fiscal and of million in fiscal out of earnings for those years. The Company has plans to repatriate prior year earnings of its foreign subsidiaries and, accordingly, estimate of the unrecognized deferred taxes related to these earnings has been made. Cash held in foreign subsidiaries is available for use in the U.S. without the likely incurrence of U.S. federal and state income tax consequences.