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Income Taxes | 12 Months Ended
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Jan. 03, 2015
Income Taxes |
Note 20. | Income Taxes
The company’s provision for income tax expense consists of the following for fiscal years 2014, 2013 and 2012:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Current Taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 72,780 |  |  | $ | 73,669 |  |  | $ | 54,599 |
State |  |  | 10,294 |  |  |  | 11,325 |  |  |  | 6,602 |
|  |  | 83,074 |  |  |  | 84,994 |  |  |  | 61,201 |
Deferred Taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 7,691 |  |  |  | 7,970 |  |  |  | 9,703 |
State |  |  | 1,550 |  |  |  | (1,485 | ) |  |  | 1,747 |
|  |  | 9,241 |  |  |  | 6,485 |  |  |  | 11,450 |
Income tax expense |  | $ | 92,315 |  |  | $ | 91,479 |  |  | $ | 72,651 |
Income tax expense differs from the amount computed by applying the U.S. federal income tax rate (35%) because of the effect of the following items for fiscal years 2014, 2013, and 2012:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Tax at U.S. federal income tax rate |  | $ | 93,819 |  |  | $ | 112,831 |  |  | $ | 73,070 |
State income taxes, net of federal income tax benefit |  |  | 7,698 |  |  |  | 6,396 |  |  |  | 5,427 |
Section 199 qualifying production activities benefit |  |  | (6,892 | ) |  |  | (7,022 | ) |  |  | (5,407 | )
Bargain purchase |  |  | — |  |  |  | (17,524 | ) |  |  | — |
Other |  |  | (2,310 | ) |  |  | (3,202 | ) |  |  | (439 | )
Income tax expense |  | $ | 92,315 |  |  | $ | 91,479 |  |  | $ | 72,651 |
The company’s effective tax rate for fiscal 2013 was impacted by the bargain purchase gain on acquisition, which was recorded net of deferred taxes as a component of income before income taxes. The gain was treated as a permanent item which had a favorable impact on the fiscal 2013 tax rate by approximately 5.2%. On September 13, 2013, the IRS and Treasury released final regulations regarding the deduction and capitalization of expenditures related to tangible property. These regulations apply to the company at the beginning of fiscal 2015 and will not have a material impact to the financial statements. Tax legislation signed into law on December 19, 2014 had an immaterial impact on the rate during fiscal 2014. Deferred tax assets (liabilities) are comprised of the following:
|  | January 3, 2015 |  |  | December 28, 2013 |
|  | (Amounts in thousands) |
Self-insurance |  | $ | 6,294 |  |  | $ | 7,227 |
Compensation and employee benefits |  |  | 12,898 |  |  |  | 13,558 |
Deferred income |  |  | 9,896 |  |  |  | 7,397 |
Loss and credit carryforwards |  |  | 21,421 |  |  |  | 27,055 |
Equity-based compensation |  |  | 15,597 |  |  |  | 14,402 |
Hedging |  |  | 7,153 |  |  |  | 7,158 |
Pension |  |  | 30,160 |  |  |  | 10,822 |
Postretirement benefits |  |  | 6,796 |  |  |  | 7,595 |
Other |  |  | 15,437 |  |  |  | 16,084 |
Deferred tax assets valuation allowance |  |  | (2,534 | ) |  |  | (2,895 | )
Deferred tax assets |  |  | 123,118 |  |  |  | 108,403 |
Depreciation |  |  | (79,480 | ) |  |  | (86,235 | )
Intangible assets |  |  | (107,188 | ) |  |  | (99,268 | )
Other |  |  | (3,780 | ) |  |  | (3,250 | )
Deferred tax liabilities |  |  | (190,448 | ) |  |  | (188,753 | )
Net deferred tax liability |  | $ | (67,330 | ) |  | $ | (80,350 | )
The company has a deferred tax asset of $11.3 million related to a federal net operating loss carryforward which we expect to fully utilize. Additionally, the company and various subsidiaries have a net deferred tax asset of $9.2 million related to state net operating loss carryforwards with expiration dates through fiscal 2034, and various state credit carryforwards of $0.9 million. The utilization of a portion of these state net operating loss carryforwards could be limited in the future; therefore, a valuation allowance of $2.5 million has been recorded. Should the company determine at a later date that certain of these losses which have been reserved for may be utilized, a benefit may be recognized in the Consolidated Statements of Income. Likewise, should the company determine at a later date that certain of these net operating losses for which a deferred tax asset has been recorded may not be utilized, a charge to the Consolidated Statements of Income may be necessary. The gross amount of unrecognized tax benefits was $2.1 million and $4.8 million as of January 3, 2015 and December 28, 2013, respectively. This change is primarily due to the expiration of the statute of limitations on several previously unrecognized tax benefits. These amounts are exclusive of interest accrued and are recorded in other long-term liabilities on the Consolidated Balance Sheet. If recognized, the $2.1 million (less $0.7 million related to tax imposed in other jurisdictions) would impact the effective rate. The company accrues interest expense and penalties related to income tax liabilities as a component of income before taxes. No accrual of penalties is reflected on the company’s balance sheet as the company believes the accrual of penalties is not necessary based upon the merits of its income tax positions. The company had an accrued interest balance of approximately $0.3 million and $0.7 million at January 3, 2015 and December 28, 2013, respectively. The company defines the federal jurisdiction as well as various state jurisdictions as “major” jurisdictions. With limited exceptions, the company is no longer subject to federal or state examinations for years prior to 2011. At this time, we do not anticipate material changes to the amount of gross unrecognized tax benefits over the next twelve months. The following is a reconciliation of the total amounts of unrecognized tax benefits for fiscal years 2014, 2013 and 2012:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Unrecognized tax benefit at beginning of fiscal year |  | $ | 4,809 |  |  | $ | 7,304 |  |  | $ | 8,709 |
Gross increases — tax positions in a current period |  |  | — |  |  |  | — |  |  |  | 331 |
Gross increases — acquisitions |  |  | — |  |  |  | 500 |  |  |  | — |
Lapses of statutes of limitations |  |  | (2,702 | ) |  |  | (2,995 | ) |  |  | (1,736 | )
Unrecognized tax benefit at end of fiscal year |  | $ | 2,107 |  |  | $ | 4,809 |  |  | $ | 7,304 |

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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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