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Income Taxes | 12 Months Ended
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Jan. 03, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 5. Income Taxes The components of income from continuing operations before provision for income taxes are as follows:
(In thousands) |  | 2014 |  | 2013 |  | 2012
Domestic |  | $ | 10,951 |  |  | $ | 8,913 |  |  | $ | 11,445 |
Foreign |  | 30,567 |  |  | 24,113 |  |  | 24,485 |
|  | $ | 41,518 |  |  | $ | 33,026 |  |  | $ | 35,930 |
The components of the provision for income taxes from continuing operations are as follows:
(In thousands) |  | 2014 |  | 2013 |  | 2012
Current Provision: |  |  |  |  |  |
Federal |  | $ | 1,080 |  |  | $ | 1,986 |  |  | $ | 1,798 |
Foreign |  | 7,703 |  |  | 7,955 |  |  | 7,363 |
State |  | 713 |  |  | 436 |  |  | 559 |
|  | 9,496 |  |  | 10,377 |  |  | 9,720 |
Deferred Provision (Benefit): |  |  |  |  |  |  |  |  |
Federal |  | 2,179 |  |  | 1,325 |  |  | (3,980 | )
Foreign |  | 418 |  |  | (2,354 | ) |  | (782 | )
State |  | 354 |  |  | (32 | ) |  | (106 | )
|  | 2,951 |  |  | (1,061 | ) |  | (4,868 | )
|  | $ | 12,447 |  |  | $ | 9,316 |  |  | $ | 4,852 |
The provision for income taxes included in the accompanying statement of income is as follows:
(In thousands) |  | 2014 |  | 2013 |  | 2012
Continuing Operations |  | $ | 12,447 |  |  | $ | 9,316 |  |  | $ | 4,852 |
Discontinued Operation |  | (14 | ) |  | (34 | ) |  | 451 |
|  | $ | 12,433 |  |  | $ | 9,282 |  |  | $ | 5,303 |
The Company receives a tax deduction upon the exercise of nonqualified stock options and the vesting of restricted stock units. The current provision for income taxes in the consolidated statement of income does not reflect $771,000, $351,000, and $132,000 of such excess tax benefits in 2014, 2013, and 2012, respectively, from the exercise of stock options and vesting of restricted stock units. The provision for income taxes from continuing operations in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate of 35% to income from continuing operations before provision for income taxes due to the following:
(In thousands) |  | 2014 |  | 2013 |  | 2012
Provision for Income Taxes at Statutory Rate |  | $ | 14,531 |  |  | $ | 11,559 |  |  | $ | 12,576 |
Increases (Decreases) Resulting From: |  |  |  |  |  |  |  |  |
State income taxes, net of federal tax |  | 694 |  |  | 304 |  |  | 295 |
U.S. tax cost (benefit) of foreign earnings |  | 206 |  |  | (119 | ) |  | 791 |
Foreign tax rate differential |  | (3,026 | ) |  | (2,681 | ) |  | (2,298 | )
(Reversal) provision of tax benefit reserves, net |  | (1,017 | ) |  | 853 |  |  | 624 |
Change in valuation allowance |  | 125 |  |  | (968 | ) |  | (7,051 | )
Nondeductible expenses |  | 1,398 |  |  | 1,580 |  |  | 775 |
Research and development tax credits |  | (274 | ) |  | (638 | ) |  | (623 | )
Other |  | (190 | ) |  | (574 | ) |  | (237 | )
|  | $ | 12,447 |  |  | $ | 9,316 |  |  | $ | 4,852 |
Net deferred tax liability in the accompanying consolidated balance sheet consists of the following:
(In thousands) |  | 2014 |  | 2013
Deferred Tax Asset: |  |  |  |
Foreign and alternative minimum tax credit carryforwards |  | $ | 725 |  |  | $ | 3,819 |
Reserves and accruals |  | 5,206 |  |  | 5,125 |
Net operating loss carryforwards |  | 13,937 |  |  | 16,452 |
Inventory basis difference |  | 3,150 |  |  | 2,797 |
Research and development |  | 422 |  |  | 1,017 |
Employee compensation |  | 4,664 |  |  | 3,199 |
Allowance for doubtful accounts |  | 555 |  |  | 595 |
Revenue recognition |  | 299 |  |  | 253 |
Other |  | 94 |  |  | 209 |
Deferred Tax Asset, Gross |  | 29,052 |  |  | 33,466 |
Less: Valuation Allowance |  | (13,040 | ) |  | (13,905 | )
Deferred Tax Asset, Net |  | 16,012 |  |  | 19,561 |
Deferred Tax Liability: |  |  |  |  |  |
Goodwill and intangible assets |  | (19,644 | ) |  | (20,923 | )
Fixed asset basis difference |  | (3,426 | ) |  | (3,619 | )
Reserves and accruals |  | (89 | ) |  | (207 | )
Other |  | (531 | ) |  | (65 | )
Deferred Tax Liability |  | (23,690 | ) |  | (24,814 | )
Net Deferred Tax Liability |  | $ | (7,678 | ) |  | $ | (5,253 | )
The deferred tax assets and liabilities are presented in the accompanying balance sheet within other current assets, other assets, other current liabilities and long-term deferred income taxes based on when the tax benefits are expected to be realized and on a net basis by tax jurisdiction. The Company has established valuation allowances related to certain domestic and foreign deferred tax assets on deductible temporary differences, tax losses, and tax credit carryforwards. The valuation allowance at year-end 2014 was $13,040,000, consisting of $1,401,000 in the U.S. and $11,639,000 in foreign jurisdictions. The decrease in the valuation allowance in 2014 of $865,000 related primarily to fluctuations in foreign currency rates which was partially offset by increases in the valuation allowance related to an increase in net operating losses in certain jurisdictions. Compliance with ASC 740 requires the Company to periodically evaluate the necessity of establishing or adjusting a valuation allowance for deferred tax assets depending on whether it is more likely than not that a related tax benefit will be realized in future periods. When assessing the need for a valuation allowance in a tax jurisdiction, the Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As part of this evaluation, the Company considers its cumulative three-year history of earnings before income taxes, taxable income in prior carryback years, future reversals of existing taxable temporary differences, prudent and feasible tax planning strategies, and expected future results of operations. As of year-end 2014, the Company continued to maintain a valuation allowance in the U.S. against its state operating loss carryforwards due to the uncertainty of future profitability in state jurisdictions. As of year-end 2014, the Company maintained valuation allowances in certain foreign jurisdictions because of the uncertainty of future profitability. At year-end 2014, the Company had domestic state and foreign net operating loss carryforwards of $30,290,000 and $42,182,000, respectively, and U.S. alternative minimum tax credits of $697,000. The domestic state loss carryforwards will expire in the years 2015 through 2030. Their utilization is limited to future taxable income from the Company's domestic subsidiaries. Of the foreign net operating loss carryforwards, $195,000 will expire in the years 2017 through 2023, and the remainder do not expire. The U.S. alternative minimum tax credits may be carried forward indefinitely. The Company has not recognized a deferred tax liability for the difference between the book basis and the tax basis of its investment in the stock of its domestic subsidiaries, related primarily to unremitted earnings of subsidiaries, because it does not expect this basis difference to become subject to tax at the parent level. The Company believes it can implement certain tax strategies to recover its investment in its domestic subsidiaries tax-free. It is the Company's intention to reinvest indefinitely the earnings of its international subsidiaries in order to support the current and future capital needs of their operations in the foreign jurisdictions. Through year-end 2014, the Company has not provided for U.S. income taxes on approximately $169,178,000 of unremitted foreign earnings. The U.S. tax cost has not been determined due to the fact that it is not practicable to estimate at this time. The related foreign tax withholding, which would be required if the Company were to remit these foreign earnings to the U.S., would be approximately $2,972,000. The Company operates within multiple tax jurisdictions and could be subject to audit in those jurisdictions. Such audits can involve complex income tax issues, which may require an extended period of time to resolve and may cover multiple years. In management's opinion, adequate provisions for income taxes have been made for all years subject to audit. As of year-end 2014, the Company had $5,006,000 of unrecognized tax benefits which, if recognized, would reduce the effective tax rate. A tabular reconciliation of the beginning and ending amount of unrecognized tax benefits at year-end 2014 and 2013 is as follows:
(In thousands) |  | 2014 |  | 2013
Unrecognized tax benefits, beginning of year |  | $ | 5,423 |  |  | $ | 4,194 |
Gross increases—tax positions in prior periods |  | — |  |  | 449 |
Gross decreases—tax positions in prior periods |  | (153 | ) |  | — |
Gross increases—current-period tax positions |  | 960 |  |  | 1,086 |
Settlements |  | — |  |  | (6 | )
Lapses of statutes of limitations |  | (967 | ) |  | (158 | )
Currency translation |  | (257 | ) |  | (142 | )
Unrecognized tax benefits, end of year |  | $ | 5,006 |  |  | $ | 5,423 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company has accrued $1,137,000 and $1,776,000 for the potential payment of interest and penalties at year-end 2014 and 2013, respectively. The interest and penalties included in the consolidated statement of income was a (benefit) expense of $(648,000) and $205,000 in 2014 and 2013, respectively. The Company is currently under audit in certain non-U.S. taxing jurisdictions. It is reasonably possible that over the next fiscal year the amount of liability for unrecognized tax benefits may be reduced by up to $770,000 due to the re-evaluation of current uncertain tax positions as a result of examinations or from the expiration of tax statutes of limitations. The Company remains subject to U.S. Federal income tax examinations for the tax years 2011 through 2014, and to non-U.S. income tax examinations for the tax years 2007 through 2014. In addition, the Company remains subject to state and local income tax examinations in the U.S. for the tax years 2005 through 2014.

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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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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 Reference 6: 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 + Details
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