XML 31 R14.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Note 7 - Income Taxes | 12 Months Ended
--- | ---
Jan. 02, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
(7) | Income Taxes
The components of the provision for income taxes are as follows (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |  |  | $ | - |
State |  |  | 24 |  |  |  | 304 |  |  |  | (68 | )
Foreign |  |  | 1,189 |  |  |  | 3,293 |  |  |  | 6 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (9,697 | ) |  |  | - |  |  |  | - |
State |  |  | (1,308 | ) |  |  | 26 |  |  |  | 56 |
Foreign |  |  | 345 |  |  |  | (1,961 | ) |  |  | - |
Income tax expense (benefit) |  | $ | (9,447 | ) |  | $ | 1,662 |  |  | $ | (6 | )
A reconciliation between the statutory federal income tax rate and the effective income tax rate is as follows (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Income (loss) before income taxes |  | $ | 17,898 |  |  | $ | 16,024 |  |  | $ | (2,118 | )
Statutory federal income tax rate |  |  | 34 | % |  |  | 34 | % |  |  | 34 | %
Income tax expense (benefit) at statutory federal rate |  |  | 6,085 |  |  |  | 5,448 |  |  |  | (720 | )
State income taxes, net of federal tax benefit |  |  | 371 |  |  |  | 310 |  |  |  | 151 |
Valuation allowance |  |  | (15,572 | ) |  |  | (5,415 | ) |  |  | 386 |
Effect of lower foreign taxes |  |  | (622 | ) |  |  | (372 | ) |  |  | 497 |
Adjustment for unrecognized tax positions |  |  | 67 |  |  |  | 397 |  |  |  | (70 | )
Other items, net |  |  | 224 |  |  |  | 1,294 |  |  |  | (250 | )
Income tax expense (benefit) |  | $ | (9,447 | ) |  | $ | 1,662 |  |  | $ | (6 | )
Effective tax rate |  |  | (52.8 | )% |  |  | 10.4 | % |  |  | 0.3 | %
In 2011, the Company established a full valuation allowance on its deferred taxes in the U.S. due to significant losses and uncertainty about future earnings forecast. As of January 2, 2016, the Company recorded an income tax benefit of $9.4 million primarily due to the reduction in the valuation allowances in the U.S. The valuation allowance in the U.S. was reduced because the weight of evidence regarding the future realizability of the deferred tax assets had become predominately positive and realization of the deferred tax assets was more likely than not. The positive evidence considered in our assessment of the realizability of the deferred tax assets included the generation of significant positive cumulative income in the U.S. for the three-year period ending with fiscal 2015, the implementation of tax planning strategies, and projections of future taxable income. Based on its earnings performance trend, expected continued profitability and improvements in the Company’s financial condition; management determined it was more likely than not that all of our U.S. deferred tax assets would be realized. The negative evidence considered included historical losses in certain prior years; however, the positive evidence outweighed this negative evidence. In fiscal 2014, the Company released approximately $4.4 million of U.S. related valuation allowance, consistent with the level of income generated. Additionally, in fiscal 2014, the Company recorded an income tax benefit of $1.1 million due to the release of the valuation allowances in foreign jurisdictions, primarily the UK and Canada. Temporary differences that gave rise to deferred tax assets and liabilities are as follows (in thousands):
|  | 2015 |  |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred revenue |  | $ | 5,129 |  |  | $ | 4,833 |
Accrued rents |  |  | 1,704 |  |  |  | 1,746 |
Net operating loss carryforwards |  |  | 306 |  |  |  | 613 |
Intangible assets |  |  | 1,349 |  |  |  | 1,489 |
Deferred compensation |  |  | 1,022 |  |  |  | 1,019 |
Accrued compensation |  |  | 1,545 |  |  |  | 3,058 |
Carryforward of tax credits |  |  | 928 |  |  |  | 4,250 |
Receivable write-offs |  |  | 1,317 |  |  |  | 1,436 |
Inventories |  |  | 656 |  |  |  | 661 |
Other |  |  | 3,306 |  |  |  | 3,270 |
|  |  | 17,262 |  |  |  | 22,375 |
Less: Valuation allowance |  |  | - |  |  |  | 15,572 |
Total deferred tax assets |  |  | 17,262 |  |  |  | 6,803 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (3,494 | ) |  |  | (1,021 | )
Other |  |  | (2,904 | ) |  |  | (2,975 | )
Total deferred tax liabilities |  |  | (6,398 | ) |  |  | (3,996 | )
Net deferred tax asset |  | $ | 10,864 |  |  | $ | 2,807 |
Income taxes and remittance taxes have not been recorded on approximately $14.0 million of undistributed earnings of foreign operations of the Company, because the Company intends to reinvest those earnings indefinitely. It is not practicable to estimate the income tax liability that might be incurred if such earnings were remitted to the U.S . As of January 2, 2016, the Company had total unrecognized tax benefits of $1.1 million compared to $1.0 million as of January 3, 2015. The Company reviews its uncertain tax positions periodically and accrues interest and penalties accordingly. Included in the unrecognized tax benefits are interest and penalties of $0.4 million and $0.3 million for 2015 and 2014, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance as of December 28, 2013 |  | $ | 560 |
Addition to reserve |  |  | 200 |
Audit settlement release |  |  | (29 | )
Lapse of statute |  |  | (12 | )
Balance as of January 3, 2015 |  |  | 719 |
Addition to reserve |  |  | - |
Audit settlement release |  |  | - |
Lapse of statute |  |  | - |
Balance as of January 2, 2016 |  | $ | 719 |
As of January 2, 2016, approximately $0.7 million of the unrecognized tax benefits would impact the Company’s provision for income taxes and effective tax rate if recognized. Management does not anticipate that the total amount of unrecognized tax benefits will increase or decrease significantly in the next twelve months. The Company’s income before income taxes from domestic and foreign operations (which include the United Kingdom, Canada, Ireland and Denmark), are as follows (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Domestic |  | $ | 13,854 |  |  | $ | 12,973 |  |  | $ | (1,134 | )
Foreign |  |  | 4,044 |  |  |  | 3,051 |  |  |  | (984 | )
Total |  | $ | 17,898 |  |  | $ | 16,024 |  |  | $ | (2,118 | )
The following tax years remain open in the Company’s major taxing jurisdictions as of January 2, 2016:
United States (Federal) |  | 2012 through 2015 |
United Kingdom |  | 2009 through 2015 |
Canada |  | 2012 through 2015 |
Ireland |  | 2007 through 2015 |
Denmark |  | 2015 |

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration