Reconciliations of the beginning and ending amount of unrecognized tax benefits are as follows (in thousands): Balance at June 27, 2009, as adjusted
Increases for tax positions taken during the current period Effect of exchange rate changes
Balance at June 26, 2010
Decreases for tax positions taken during a prior period Increases for tax positions taken during the current period Effect of exchange rate changes
Balance at June 30, 2011
Increases for tax positions taken during a prior period Increases for tax positions taken during the current period Effect of exchange rate changes Decrease relating to settlement
Decreases resulting from the expiration of the statute of limitations Balance at June 30, 2012
$
$
(9,817) (234) 242
(9,809) 156
(1,189) (285)
(11,127) (32)
(955) 473 137 914
(10,590)
The long-term tax obligations on the balance sheet as of June 30, 2012 and June 30, 2011 relate primarily to transfer pricing adjustments. The Company has also recorded a non-current tax receivable for $3.8 million and $3.6 million at June 30, 2012 and 2011, respectively, representing the corollary effect of transfer pricing competent authority adjustments.
During the next 12 months, the Company expects there is the possibility that there will be a decrease in the total amount of unrecognized tax benefits as a result of the passing of the related statute of limitations. The Company recognizes interest and penalties related to income tax matters in income tax expense.
The Company’s US tax returns are no longer subject to U.S. federal examination by the Internal Revenue Service for years prior to 2005. As of June 30, 2012, the Company did have a state income tax audit in process. There were no other local or federal income tax audits as of June 30, 2012. In international jurisdictions the years that may be examined vary by country.
The federal NOL carryforward of $16.8 million expires beginning in 2026. The state tax loss carryforward tax effected benefit of $0.9 million expire at various times over the next 5 years. The foreign tax credit carryforward of $1.0 million expires in the years 2014 through 2015.
No deferred taxes have been provided on the undistributed non-U.S. subsidiary earnings that are considered to be permanently invested. At June 30, 2012, the estimated amount of total unremitted earnings is $71.7 million. The Company has not determined the total amount of the unrecognized deferred taxes related to these earnings as the Company has permanently invested those earnings overseas.
11. EMPLOYEE BENEFIT AND RETIREMENT PLANS
The Company has two defined benefit pension plans, one for U.S. employees and another for U.K. employees. The UK plan was closed to new entrants in fiscal 2009. The Company also has defined contribution plans. The Company has a postretirement medical and life insurance benefit plan for U.S. employees. In addition, certain U.S. employees participate in an Employee Stock Ownership Plan (ESOP).
The Company’s contribution toward medical benefits for qualified retirees between ages 55 and 64 is based on a sliding scale ranging from 15% to 75% of the current annual premium rates. For retirees 65 and older, the Company’s contribution is fixed at $28.50 or $23 per month depending upon the plan the retiree has chosen.
The Company makes periodic contributions to the ESOP in the form of Company stock or in cash to be invested in Company stock. Employees are not required or permitted to make contributions to the ESOP. Ninety percent of the actuarially determined annuity value of their ESOP shares is used to offset benefits otherwise due under the domestic defined benefit pension plan.
The total cost of all such plans for fiscal 2012, 2011 and 2010, considering the combined projected benefits and funds of the ESOP as well as the other plans, was $18.0 million, $1.9 million and $11.5 million, respectively. Included in these amounts are the Company’s contributions to the defined contribution plans amounting to $0.2 million, $0.2 million and $0.1 million in fiscal 2012, 2011 and 2010, respectively.
32 B32
10-K
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