Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
6 Months Ended
Jun. 29, 2013
Income Tax Disclosure [Abstract]  
Income Taxes

8) Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets are reduced, if deemed necessary, by a valuation allowance for the amount of tax benefits which are not expected to be realized. Investment tax credits are recognized on the flow through method.

ASC Topic 740-10 Overall—Uncertainty in Income Taxes (“ASC Topic 740-10”) clarifies the accounting and disclosure for uncertainty in tax positions. ASC Topic 740-10 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company is subject to the provisions of ASC Topic 740-10 and has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. Should the Company need to accrue a liability for uncertain tax benefits, any interest associated with that liability will be recorded as interest expense. Penalties, if any, would be recognized as operating expenses. There are no penalties or interest liability accrued as of June 29, 2013 or December 31, 2012, nor are any penalties or interest costs included in expense for the periods ending June 29, 2013 and June 30, 2012. The years under which we conducted our evaluation coincided with the tax years currently still subject to examination by major federal and state tax jurisdictions, those being 2010 through 2012 for federal purposes and 2009 through 2012 for state purposes.

The effective tax rate was 26.1% and 31.6% for the six months and 33.2% and 30.8% for the three months ended June 29, 2013 and June 30, 2012, respectively. The effective tax rate for the six months of 2013 was impacted primarily by the domestic production activity deduction, the recognition of approximately $1.1 million in domestic 2012 R&D tax credits and $0.4 million in domestic 2013 R&D tax credits. The effective tax rate for the three months of 2013 was impacted primarily by the domestic production activity deduction and the recognition of approximately $0.2 million in domestic 2013 R&D tax credits.