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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 from continuing operations before provision for income taxes are as follows:
(In thousands) |  | 2015 |  | 2014 |  | 2013
Domestic |  | $ | 13,076 |  |  | $ | 10,951 |  |  | $ | 8,913 |
Foreign |  | 36,295 |  |  | 30,567 |  |  | 24,113 |
|  | $ | 49,371 |  |  | $ | 41,518 |  |  | $ | 33,026 |
The components of the provision for income taxes from continuing operations are as follows:
(In thousands) |  | 2015 |  | 2014 |  | 2013
Current Provision: |  |  |  |  |  |
Federal |  | $ | 4,693 |  |  | $ | 1,080 |  |  | $ | 1,986 |
Foreign |  | 10,623 |  |  | 7,703 |  |  | 7,955 |
State |  | 1,152 |  |  | 713 |  |  | 436 |
|  | 16,468 |  |  | 9,496 |  |  | 10,377 |
Deferred (Benefit) Provision: |  |  |  |  |  |  |  |  |
Federal |  | 45 |  |  | 2,179 |  |  | 1,325 |
Foreign |  | (1,378 | ) |  | 418 |  |  | (2,354 | )
State |  | (373 | ) |  | 354 |  |  | (32 | )
|  | (1,706 | ) |  | 2,951 |  |  | (1,061 | )
|  | $ | 14,762 |  |  | $ | 12,447 |  |  | $ | 9,316 |
The provision for income taxes included in the accompanying statement of income is as follows:
(In thousands) |  | 2015 |  | 2014 |  | 2013
Continuing Operations |  | $ | 14,762 |  |  | $ | 12,447 |  |  | $ | 9,316 |
Discontinued Operation |  | 43 |  |  | (14 | ) |  | (34 | )
|  | $ | 14,805 |  |  | $ | 12,433 |  |  | $ | 9,282 |
The Company receives a tax deduction upon the exercise of nonqualified stock options and the vesting of RSUs. The current provision for income taxes in the consolidated statement of income does not reflect $881,000, $771,000, and $351,000 of such excess tax benefits in 2015, 2014, and 2013, respectively, from the exercise of stock options and vesting of RSUs. 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) |  | 2015 |  | 2014 |  | 2013
Provision for Income Taxes at Statutory Rate |  | $ | 17,279 |  |  | $ | 14,531 |  |  | $ | 11,559 |
Increases (Decreases) Resulting From: |  |  |  |  |  |  |  |  |
State income taxes, net of federal tax |  | 506 |  |  | 694 |  |  | 304 |
U.S. tax cost (benefit) of foreign earnings |  | 455 |  |  | 206 |  |  | (119 | )
Foreign tax rate differential |  | (3,852 | ) |  | (3,026 | ) |  | (2,681 | )
Provision for (reversal of) tax benefit reserves, net |  | 33 |  |  | (1,017 | ) |  | 853 |
Change in valuation allowance |  | 99 |  |  | 125 |  |  | (968 | )
Nondeductible expenses |  | 704 |  |  | 1,398 |  |  | 1,580 |
Research and development tax credits |  | (210 | ) |  | (274 | ) |  | (638 | )
Other |  | (252 | ) |  | (190 | ) |  | (574 | )
|  | $ | 14,762 |  |  | $ | 12,447 |  |  | $ | 9,316 |
Net deferred tax liability in the accompanying consolidated balance sheet consists of the following:
(In thousands) |  | 2015 |  | 2014
Deferred Tax Asset: |  |  |  |
Foreign and alternative minimum tax credit carryforwards |  | $ | 23 |  |  | $ | 725 |
Reserves and accruals |  | 5,003 |  |  | 5,206 |
Net operating loss carryforwards |  | 12,306 |  |  | 13,937 |
Inventory basis difference |  | 3,253 |  |  | 3,150 |
Research and development |  | 246 |  |  | 422 |
Employee compensation |  | 5,427 |  |  | 4,664 |
Allowance for doubtful accounts |  | 405 |  |  | 555 |
Revenue recognition |  | 525 |  |  | 299 |
Other |  | 151 |  |  | 94 |
Deferred Tax Asset, Gross |  | 27,339 |  |  | 29,052 |
Less: Valuation Allowance |  | (11,493 | ) |  | (13,040 | )
Deferred Tax Asset, Net |  | 15,846 |  |  | 16,012 |
Deferred Tax Liability: |  |  |  |  |  |
Goodwill and intangible assets |  | (17,450 | ) |  | (19,644 | )
Fixed asset basis difference |  | (3,234 | ) |  | (3,426 | )
Reserves and accruals |  | (32 | ) |  | (89 | )
Other |  | (284 | ) |  | (531 | )
Deferred Tax Liability |  | (21,000 | ) |  | (23,690 | )
Net Deferred Tax Liability |  | $ | (5,154 | ) |  | $ | (7,678 | )
In 2014, the deferred tax assets and liabilities are presented in the accompanying balance sheet within current deferred tax asset, 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. In 2015, the deferred tax assets and liabilities are presented in the accompanying balance sheet within other assets and long-term deferred income taxes on a net basis by tax jurisdiction. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes as it requires that deferred tax assets and liabilities be classified as noncurrent in the consolidated balance sheet. The Company early adopted this ASU for the year ended January 2, 2016, which resulted in all deferred taxes being reported as non-current in its consolidated balance sheet. The Company has elected not to retrospectively restate its deferred tax assets and liabilities in prior periods. The components of the net deferred tax liability are as follows:
(In thousands) |  | 2015 |  | 2014
Current Deferred Tax Asset |  | $ | — |  |  | $ | 9,536 |
Long-term Deferred Tax Asset |  | 3,838 |  |  | 1,780 |
Current Deferred Tax Liability |  | — |  |  | (34 | )
Long-term Deferred Tax Liability |  | (8,992 | ) |  | (18,960 | )
Net Deferred Tax Liability |  | $ | (5,154 | ) |  | $ | (7,678 | )
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 2015 was $11,493,000, consisting of $966,000 in the U.S. and $10,527,000 in foreign jurisdictions. The decrease in the valuation allowance in 2015 of $1,547,000 related primarily to fluctuations in foreign currency exchange rates, tax rate changes, and expected future utilization of net operating losses in certain state and foreign jurisdictions, and was offset partially by an increase 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 2015, the Company continued to maintain a valuation allowance in the U.S. against a large portion of its state operating loss carryforwards due to the uncertainty of future profitability in state jurisdictions. As of year-end 2015, the Company maintained valuation allowances in certain foreign jurisdictions because of the uncertainty of future profitability. At year-end 2015, the Company had domestic state and foreign net operating loss carryforwards of $28,740,000 and $37,543,000, respectively. The domestic state loss carryforwards will expire in the years 2016 through 2035. Their utilization is limited to future taxable income from the Company's domestic subsidiaries. Of the foreign net operating loss carryforwards, $73,000 will expire in the years 2017 through 2022, and the remainder do not expire. 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 2015, the Company has not provided for U.S. income taxes on approximately $168,225,000 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 $3,557,000. 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 2015, the Company had $5,052,000 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 2015 and 2014 is as follows:
(In thousands) |  | 2015 |  | 2014
Unrecognized tax benefits, beginning of year |  | $ | 5,006 |  |  | $ | 5,423 |
Gross decreases—tax positions in prior periods |  | (28 | ) |  | (153 | )
Gross increases—current-period tax positions |  | 476 |  |  | 960 |
Lapses of statutes of limitations |  | (253 | ) |  | (967 | )
Currency translation |  | (149 | ) |  | (257 | )
Unrecognized tax benefits, end of year |  | $ | 5,052 |  |  | $ | 5,006 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company has accrued $1,246,000 and $1,137,000 for the potential payment of interest and penalties at year-end 2015 and 2014, respectively. The interest and penalties included in the consolidated statement of income was an expense (benefit) of $103,000 and $(648,000) in 2015 and 2014, 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 $364,000 primarily from the expiration of tax statutes of limitations. The Company remains subject to U.S. Federal income tax examinations for the tax years 2002 through 2015, and to non-U.S. income tax examinations for the tax years 2004 through 2015. In addition, the Company remains subject to state and local income tax examinations in the U.S. for the tax years 2000 through 2015.

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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 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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