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Income Taxes | 12 Months Ended
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Jan. 03, 2015
Income Taxes |
Income Taxes | 14. Income Taxes The components of income (loss) before (provision) benefit for income taxes are as follows (in thousands):
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2014 (53 weeks) |  | 2013 (52 weeks) |  | 2012 (52 weeks) |
Income (loss) before (provision) benefit for income taxes: |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 20,899 |  | $ | 13,659 |  | $ | (27,290 | )
Foreign |  |  | 2,416 |  |  | 4,259 |  |  | (30,733 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | 23,315 |  | $ | 17,918 |  | $ | (58,023 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The provision (benefit) for income taxes consists of the following (in thousands):
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2014 (53 weeks) |  | 2013 (52 weeks) |  | 2012 (52 weeks) |
Currently payable: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 8,585 |  | $ | 1,241 |  | $ | 3,637 |
Foreign |  |  | 876 |  |  | 1,264 |  |  | 50 |
State |  |  | 1,878 |  |  | 254 |  |  | 1,015 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 11,339 |  |  | 2,759 |  |  | 4,702 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,068 | ) |  | 3,592 |  |  | (8,163 | )
Foreign |  |  | (505 | ) |  | (238 | ) |  | 21 |
State |  |  | 142 |  |  | 570 |  |  | (1,740 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | (1,431 | ) | $ | 3,924 |  | $ | (9,882 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | 9,908 |  | $ | 6,683 |  | $ | (5,180 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
A reconciliation of CRA's tax rates with the Federal statutory rate is as follows:
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2014 |  | 2013 |  | 2012 |
Federal statutory rate |  |  | 35.0 | % |  | 35.0 | % |  | (35.0 | )%
State income taxes, net of federal income tax benefit |  |  | 3.6 |  |  | 4.4 |  |  | (1.3 | )
Goodwill impairment |  |  | — |  |  | — |  |  | 20.6 |
Foreign losses benefited |  |  | (1.8 | ) |  | (2.8 | ) |  | (0.1 | )
Losses not benefited |  |  | 0.6 |  |  | 0.3 |  |  | 4.2 |
Foreign rate differential |  |  | 0.6 |  |  | (0.4 | ) |  | 2.1 |
Foreign tax credit |  |  | — |  |  | (0.1 | ) |  | (0.5 | )
Uncertain tax positions |  |  | 0.7 |  |  | (2.1 | ) |  | — |
Impact of NeuCo's tax provision charges |  |  | 0.9 |  |  | 1.5 |  |  | 0.1 |
Permanently disallowed expenses |  |  | 2.1 |  |  | 1.6 |  |  | 1.0 |
Prior period adjustments |  |  | 3.0 |  |  | — |  |  | — |
Release of valuation allowance |  |  | (2.2 | ) |  | — |  |  | — |
Other |  |  | — |  |  | (0.1 | ) |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 42.5 | % |  | 37.3 | % |  | (8.9 | )%
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The effective tax rate in fiscal 2014 was higher than CRA's combined Federal and state statutory tax rate primarily due to a non-cash tax expense recorded in the second quarter of fiscal 2014 to correct an immaterial error in our previously issued consolidated financial statements offset slightly by other prior period adjustments recorded in the fourth quarter. The effective tax rate also included a benefit for the release of a valuation allowance as a result of recording a deferred tax liability associated with acquisition-related intangibles and the utilization of certain historical net operating losses that previously had a valuation allowance which were realized due to the profitability of the acquired business. The components of CRA's deferred tax assets (liabilities) are as follows (in thousands):
|  | January 3, 2015 |  | December 28, 2013 |
Deferred tax assets: |  |  |  |  |  |  |
Accrued compensation and related expense |  | $ | 23,876 |  | $ | 21,064 |
Tax basis in excess of financial basis of net accounts receivable |  |  | 2,065 |  |  | 2,363 |
Net operating loss carryforwards |  |  | 5,201 |  |  | 5,421 |
Tax basis in excess of financial basis of fixed assets |  |  | 19 |  |  | 1,489 |
Accrued expenses and other |  |  | 967 |  |  | 902 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total gross deferred tax assets |  |  | 32,128 |  |  | 31,239 |
Less: valuation allowance |  |  | (4,912 | ) |  | (6,101 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax assets net of valuation allowance |  |  | 27,216 |  |  | 25,138 |
Deferred tax liabilities: |  |  |  |  |  |  |
Excess tax over book amortization |  |  | 5,708 |  |  | 2,938 |
Tax basis in excess of financial basis of debentures |  |  | 3,844 |  |  | 5,024 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  |  | 9,552 |  |  | 7,962 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  | $ | 17,664 |  | $ | 17,176 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
In general, a valuation allowance is recorded against deferred tax assets because CRA's management believes, after considering the available evidence, that it is more likely than not that the assets will not be realized. Reductions in valuation allowances are a result of management's consideration of historical profitability, future expected results and the nature of the related deferred tax assets. The net change in the total valuation allowance for fiscal 2014 was a decrease of approximately $1.2 million compared to fiscal 2013. The $1.2 million decrease was primarily related to the recording of a $0.5 million deferred tax liability associated with acquisition-related intangibles, the utilization of $0.4 million net operating losses also as a result of the acquisition, as well as deferred tax changes that lowered the need for a valuation allowance by $0.2 million, offset partially by an additional valuation allowance recorded against certain foreign net operating losses of $0.1 million. The ultimate realization of deferred tax assets that continue to be subject to valuation allowances is dependent upon the generation of future taxable income during the periods and in the tax jurisdictions in which those temporary differences become deductible. At January 3, 2015 CRA had $9.9 million of foreign net operating loss carry forwards. The foreign operating losses have an indefinite life, except for $0.2 million that will begin to expire in fiscal 2016. NeuCo has net operating loss carryforwards for U.S. federal and U.S. state tax purposes of $10.4 million which are subject to a full valuation allowance and begin to expire in 2015. NeuCo files a separate U.S. federal tax return and none of its losses are available to offset CRA's consolidated taxable income. The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):
|  | January 3, 2015 |  | December 28, 2013 |
Balance at beginning of period |  | $ | 372 |  | $ | 3,032 |
Additions for tax positions taken during prior years |  |  | 127 |  |  | 372 |
Additions for tax positions taken during the current year |  |  | 45 |  |  | — |
Settlements with tax authorities |  |  | (9 | ) |  | (3,032 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at end of the period |  | $ | 535 |  | $ | 372 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which CRA has unrecognized tax benefits, is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome. CRA adjusts these unrecognized tax benefits, and the associated interest, in light of changing facts and circumstances. At the end of fiscal 2014, CRA had $185,000 of interest accrued on its unrecognized tax benefit balance for a total unrecognized tax benefit balance on the balance sheet of $720,000. Of the total unrecognized tax benefit balance, $111,000 is offset by a future tax deduction when recognized. CRA reported $85,000 of interest and penalties related to unrecognized tax benefits in income tax expense during fiscal 2014 as compared to $67,000 during fiscal 2013. Settlement of any particular position could require the use of cash. Of the total $535,000 balance at the end of fiscal 2014, a favorable resolution would result in $467,000 being recognized as a reduction to the effective income tax rate in the period of resolution. It is reasonably likely that $162,000 of gross unrecognized tax benefits will reverse within the next twelve months. The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States. CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2011. CRA's United Kingdom subsidiary's corporate tax returns are no longer subject to examination by Her Majesty's Revenue and Customs for fiscal years before fiscal 2013. CRA is currently under examination in Germany for fiscal 2008 through fiscal 2011 and in France for fiscal 2011 and fiscal 2012. CRA believes its reserves for uncertain tax positions are adequate. CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings from its foreign subsidiaries of approximately $3.5 million as of January 3, 2015 because such earnings are considered to be indefinitely reinvested. CRA does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs. If CRA were to repatriate its foreign earnings that are indefinitely reinvested, it would accrue substantially no additional tax expense.

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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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