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Income Taxes | 12 Months Ended
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Jan. 02, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before provision for income taxes are as follows (in thousands):
| Year ended January 2, 2016 |  | Year ended January 3, 2015 |  | Year ended December 28, 2013
United States | $ | 87,762 |  |  | $ | 69,282 |  |  | $ | 50,782 |
Foreign | 28,583 |  |  | 32,759 |  |  | 24,944 |
Total | $ | 116,345 |  |  | $ | 102,041 |  |  | $ | 75,726 |
The following table presents the current and deferred provision (benefit) for income taxes (in thousands):
| Year ended January 2, 2016 |  | Year ended January 3, 2015 |  | Year ended December 28, 2013
Current: |  |  |  |  |
Federal | $ | 31,983 |  |  | $ | 22,553 |  |  | $ | 24,488 |
State | 2,388 |  |  | 2,736 |  |  | 2,426 |
Foreign | 2,448 |  |  | 2,709 |  |  | 1,704 |
| 36,819 |  |  | 27,998 |  |  | 28,618 |
Deferred: |  |  |  |  |
Federal | (900 | ) |  | 342 |  |  | (7,281 | )
State | (1,206 | ) |  | (811 | ) |  | (970 | )
Foreign | 132 |  |  | 149 |  |  | (362 | )
| (1,974 | ) |  | (320 | ) |  | (8,613 | )
Total | $ | 34,845 |  |  | $ | 27,678 |  |  | $ | 20,005 |
Included in the fiscal 2015, 2014 and 2013 current tax provisions are net increases of $0.6 million, $1.1 million and $0.3 million, respectively, for tax and accrued interest related to uncertain tax positions for each fiscal year. The reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:
| Year ended January 2, 2016 |  | Year ended January 3, 2015 |  | Year ended December 28, 2013
Statutory regular federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State provision, net of federal benefit | 0.7 |  |  | 1.2 |  |  | 1.3 |
Nondeductible items | 1.7 |  |  | 1.3 |  |  | 0.9 |
Foreign tax rate differential | (6.3 | ) |  | (8.2 | ) |  | (9.8 | )
Tax credits | (1.7 | ) |  | (1.5 | ) |  | (3.5 | )
Change in federal valuation allowance | 0.4 |  |  | (0.1 | ) |  | 3.0 |
Other | 0.2 |  |  | (0.6 | ) |  | (0.5 | )
Total | 30.0 | % |  | 27.1 | % |  | 26.4 | %
On December 18, 2015, President Obama signed The Protecting Americans from Tax Hikes Act into law, which reinstated and permanently extended the federal research tax credit (R&D Tax Credit) retroactively back to January 1, 2015. On December 19, 2014, President Obama signed The Tax Increase Prevention Act of 2014 into law, which retroactively extended the R&D Tax Credit from January 1, 2014 through December 31, 2014. On January 2, 2013, President Obama signed The American Taxpayer Relief Act of 2012 (2012 Tax Act) into law, which reinstated the R&D Tax Credit retroactively from January 1, 2012 through December 31, 2013. As a result of the 2012 Tax Act, the Company recorded additional R&D Tax Credits during fiscal 2013 for amounts generated in fiscal 2012 of approximately $1.0 million. As a result of Cercacor’s continuing operating losses, Cercacor management determined that there was insufficient positive evidence to support a more likely than not realization of its remaining deferred tax assets. As a result, Cercacor recorded a federal valuation allowance of approximately $2.3 million against its deferred tax assets in fiscal 2013. The components of the deferred tax assets are as follows (in thousands):
| January 2, 2016 |  | January 3, 2015
Deferred tax assets: |  |  |
Tax credits | $ | 4,683 |  |  | $ | 3,260 |
Deferred revenue | 3,994 |  |  | 4,943 |
Accrued liabilities | 20,817 |  |  | 14,723 |
Share-based compensation | 20,688 |  |  | 21,594 |
Other | 2,416 |  |  | 3,191 |
Total | 52,598 |  |  | 47,711 |
Valuation allowance | (4,196 | ) |  | (3,365 | )
Total deferred tax assets | 48,402 |  |  | 44,346 |
Deferred tax liabilities: |  |  |
State taxes and other | (4,276 | ) |  | (2,088 | )
Total deferred tax liabilities | (4,276 | ) |  | (2,088 | )
Net deferred tax assets | $ | 44,126 |  |  | $ | 42,258 |
As of January 2, 2016, the Company has $0.1 million of net operating losses from various states, which will begin to expire in 2028, all of which will be recorded in equity when realized. The Company has state research and development tax credits of $4.5 million that will carry forward indefinitely. Additionally, the Company has $0.4 million of investment tax credit on research and development expenditures from its operations in Canada that will begin to expire in 2030. The Company believes that it is more likely than not that the deferred tax assets related to these carryforwards will be realized. In making this determination, the Company considered all available positive and negative evidence, including scheduled reversals of liabilities, projected future taxable income, tax planning strategies and recent financial performance. Cercacor, the Company’s VIE, is not included in the Company’s consolidated federal or state income tax returns. At January 2, 2016, Cercacor has federal research and development tax credit carryforwards of $0.7 million that will begin to expire in 2032 and state research and development tax credit carryforwards of $1.0 million, which will carry forward indefinitely. After considering all positive and negative evidence, including Cercacor’s continuing operating losses, Cercacor management believes that there is insufficient positive evidence to support a more likely than not realization of these carryforwards, as well as the rest of its net deferred tax assets and, therefore, has recorded a full valuation allowance against these carryforwards as well, as the rest of Cercacor’s net deferred tax assets. As a result of certain business and employment actions undertaken by the Company, income earned in a certain European country is subject to a reduced tax rate through 2018 as the Company has met certain employment thresholds. For the years ended January 2, 2016, January 3, 2015 and December 28, 2013, the estimated income tax benefit related to such business arrangement was $1.3 million, $1.6 million and $1.2 million, respectively, and favorably impacted net income per diluted share by $0.02, $0.03 and $0.02, respectively. During the years ended January 2, 2016, January 3, 2015 and December 28, 2013, the Company recorded a tax benefit of $5.1 million, $0.2 million and $0.7 million, respectively, from the exercise of non-qualified stock options and incentive stock options as a reduction of its income tax liability and an increase in equity. The tax benefit results from the difference between the fair value of the Company’s stock on the exercise dates and the exercise price of the option. As of January 2, 2016, the Company has not provided for deferred income taxes on approximately $110.3 million of cumulative undistributed earnings of certain foreign subsidiaries, because such earnings are intended to be permanently reinvested in those operations. If such earnings were distributed, the Company would accrue estimated additional income tax expense of $34.5 million. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
| Year ended January 2, 2016 |  | Year ended January 3, 2015
Unrecognized tax benefits (gross), beginning of period | $ | 8,024 |  |  | $ | 6,630 |
Increase from tax positions in prior period | 131 |  |  | 830 |
Increase from tax positions in current period | 1,616 |  |  | 958 |
Settlements | — |  |  | — |
Lapse of statute of limitations | (896 | ) |  | (394 | )
Unrecognized tax benefits (gross), end of period | $ | 8,875 |  |  | $ | 8,024 |
The amount of unrecognized benefits which, if ultimately recognized, could favorably affect the tax rate in a future period was $7.2 million and $6.7 million as of January 2, 2016 and January 3, 2015, respectively. It is reasonably possible that the amount of unrecognized tax benefits in various jurisdictions may change in the next 12 months due to the expiration of statutes of limitation and audit settlements. However, due to the uncertainty surrounding the timing of these events, an estimate of the change within the next 12 months cannot be made at this time. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. For the years ended January 2, 2016, January 3, 2015 and December 28, 2013, the Company had accrued $1.1 million, $0.9 million and $0.9 million, respectively, for the payment of interest. The Company conducts business in multiple jurisdictions, and as a result, one or more of the Company’s subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for years through 2011. The Company’s 2012 income tax return is currently under examination by the U.S. Internal Revenue Service. All material state, local and foreign income tax matters have been concluded for years through 2008. The Company does not believe that the results of any tax authority examination would have a significant impact on its financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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