XML 24 R11.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our (benefit from) provision for income taxes consisted of the following:
| Fiscal Year Ended December 30, 2017 |  | Fiscal Year Ended December 31, 2016 |  | Fiscal Year Ended January 2, 2016
| (In thousands)
Federal income taxes: |  |  |  |  |
Current | $ | (659 | ) |  | $ | 232 |  |  | $ | — |
Deferred | (45,868 | ) |  | — |  |  | — |
State income taxes: |  |  |  |  |  |  |  |
Current | 1,054 |  |  | 962 |  |  | 235 |
Deferred | (7,985 | ) |  | — |  |  | — |
Foreign income taxes: |  |  |  |  |  |  |  |
Current | 49 |  |  | (70 | ) |  | (68 | )
Deferred | — |  |  | (3 | ) |  | (14 | )
(Benefit from) provision for income taxes | $ | (53,409 | ) |  | $ | 1,121 |  |  | $ | 153 |
The federal statutory income tax rate was 35%. Our (benefit from) provision for income taxes is reconciled to the federal statutory amount as follows:
| Fiscal Year Ended December 30, 2017 |  | Fiscal Year Ended December 31, 2016 |  | Fiscal Year Ended January 2, 2016
| (In thousands)
Expense (benefit) from income taxes computed at the federal statutory tax rate | $ | 3,355 |  |  | $ | 6,022 |  |  | $ | (3,998 | )
Expense (benefit) from state income taxes, net of federal benefit | 253 |  |  | 595 |  |  | (474 | )
Valuation allowance change | (87,137 | ) |  | (6,319 | ) |  | 4,318 |
Nondeductible items | 664 |  |  | 403 |  |  | 288 |
Alternative minimum tax | — |  |  | 232 |  |  | — |
Tax Cuts and Jobs Act of 2017 | 29,387 |  |  | — |  |  | — |
Other | 69 |  |  | 188 |  |  | 19 |
(Benefit from) provision for income taxes | $ | (53,409 | ) |  | $ | 1,121 |  |  | $ | 153 |
The change in valuation allowance is exclusive of items that do not impact income from continuing operations, but are reflected in the balance sheet change in deferred income tax assets and liabilities as disclosed in the components of net deferred income tax assets table below. In accordance with the intraperiod tax allocation provisions of GAAP, we are required to consider all items (including items recorded in other comprehensive income) in determining the amount of tax expense or benefit that should be allocated between continuing operations and other comprehensive income. In fiscal 2017, there was no intraperiod tax allocation since there was income from continuing operations and income in other comprehensive income. In fiscal 2016, there was no intraperiod tax allocation because there were sufficient loss carryforwards to offset income from continuing operations. In fiscal 2015, there was no intraperiod tax allocation since there was a loss in continuing operations along with a loss in other comprehensive income for that period. While the income tax provision from continuing operations is reported in our Consolidated Statements of Operations and Comprehensive Income (Loss), the income tax expense on other comprehensive income is recorded directly to accumulated other comprehensive loss, which is a component of stockholders’ equity (deficit). On December 22, 2017, the U.S. government enacted tax legislation commonly known as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The Tax Act provides for significant changes to tax law for tax years beginning after December 31, 2017, including, but not limited to, the reduction of the U.S. federal corporate income tax rate from 35% to 21%, repeal of the corporate alternative minimum tax (“AMT”), and additional limitations on the deductibility of interest expense and executive compensation. On December 22, 2017, Staff Accounting Bulletin No. 118 was issued by the Securities and Exchange Commission, which allows companies to record provisional amounts to reflect the income tax effects for the Tax Act during a measurement period that does not extend beyond one year from the enactment date. The provisional amount includes the re-measurement of our deferred tax balances as of the enactment date of the Tax Act, based on the rates at which the balances are expected to reverse in the future. We are still evaluating the effects of the new executive compensation provisions under Internal Revenue Code Section 162(m) and awaiting additional guidance to be issued. However, based on our current analysis, the income tax effect would be immaterial to our financial statements. In order to determine the income tax effects of the Tax Act, we were required to re-measure our deferred tax balances as of the enactment date of the Tax Act, based on the rates at which the balances are expected to reverse in the future. The reduction in the federal corporate income tax rate from 35% to 21% resulted in a reduction in our deferred tax asset of $28.8 million with an offsetting adjustment to the valuation allowance of $28.6 million resulting in deferred income tax expense of $0.2 million in fiscal 2017. Furthermore, the Tax Act repealed the AMT and provided that taxpayers with AMT credit carryovers in excess of their regular tax liability may have the credits refunded over a period from 2018 - 2021. As a result, we released our valuation allowance on AMT credits due to the Tax Act of $0.8 million, and recorded a corresponding deferred income tax benefit. In addition, we reclassified our AMT credit carryforward of $0.8 million to a non-current receivable. Once reclassified, we reduced the estimated refund and recorded a current income tax expense of $0.1 million to account for the effects of the sequester. Our financial statements contain certain deferred tax assets which primarily resulted from tax benefits associated with the loss before income taxes in prior years, as well as net deferred income tax assets resulting from other temporary differences related to certain reserves, pension obligations, and differences between book and tax depreciation and amortization. We record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried under tax law. In our evaluation of the weight of available evidence at the end of fiscal 2017, we considered recent reported income generated in the current and prior two fiscal years, which resulted in a three-year cumulative income situation as positive evidence which carried substantial weight. While this was substantial, it was not the only evidence we evaluated. We also considered evidence related to the four sources of taxable income, to determine whether such positive evidence outweighed the negative evidence. The evidence considered included:
• | future reversals of existing taxable temporary differences;
• | future taxable income exclusive of reversing temporary differences and carryforwards;
• | taxable income in prior carryback years, if carryback is permitted under the tax law; and
• | tax planning strategies.
At the end of fiscal 2017, we concluded that the weight of the positive evidence outweighed the negative evidence. In addition to the positive evidence discussed above, we considered as positive evidence forecasted future taxable income and the evidence from business and tax planning strategies described below. Further positive evidence that occurred during the fourth quarter of 2017 was the refinancing of our revolving credit facility to a new five-year period with more favorable terms, the positive market reaction to our former majority shareholder’s underwritten secondary offering to sell its shares of our common stock, and the continued improvement of projected housing starts. As a result, we recorded a partial release of our valuation allowance of $53.5 million. The remaining valuation allowance of $10.4 million as of fiscal 2017 was primarily related to state net operating loss carryforwards. Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgments. We believe that the change in control under Internal Revenue Code Section 382, resulting from the completion of the secondary offering on October 23, 2017 (as described above), will not cause any of our federal net operating losses to expire unused as management has been effectively implementing a real estate strategy involving sales and leaseback of real estate that is further supported by the sale-leaseback of four warehouses in January 2018 (See Note 16 for more detail). The components of our net deferred income tax assets are as follows:
| December 30, 2017 |  | December 31, 2016
| (In thousands)
Deferred income tax assets: |  |  |
Inventory reserves | $ | 1,654 |  |  | $ | 2,088 |
Compensation-related accruals | 3,692 |  |  | 4,465 |
Accruals and reserves | 72 |  |  | 112 |
Accounts receivable | 443 |  |  | 656 |
Intangible assets | — |  |  | 583 |
Property and equipment | 4,614 |  |  | 1,134 |
Pension | 7,011 |  |  | 10,747 |
Benefit from NOL carryovers (1) | 46,873 |  |  | 78,236 |
Other | 285 |  |  | 194 |
Total gross deferred income tax assets | 64,644 |  |  | 98,215 |
Less: valuation allowances | (10,415 | ) |  | (97,552 | )
Total net deferred income tax assets | 54,229 |  |  | 663 |
Deferred income tax liabilities: |  |  |
Other | (376 | ) |  | (663 | )
Total deferred income tax liabilities | (376 | ) |  | (663 | )
Deferred income tax asset, net | $ | 53,853 |  |  | $ | — |
(1) | Our federal NOL carryovers are $158.2 million and will expire in 13 to 18 years. Our state NOL carryovers are $245.7 million and will expire in 1 to 20 years.
Activity in our deferred tax asset valuation allowance for fiscal 2017 and 2016 was as follows:
| Fiscal Year Ended December 30, 2017 |  | Fiscal Year Ended December 31, 2016
| (In thousands)
Balance as of beginning of the year | $ | 97,552 |  |  | $ | 103,311 |
Valuation allowance provided for taxes related to: |  |  |  |  |
(Income) loss before income taxes | (4,300 | ) |  | (5,759 | )
Tax Cuts and Jobs Act of 2017 | (29,387 | ) |  | — |
Release of valuation allowance | (53,450 | ) |  | — |
Balance as of end of the year | $ | 10,415 |  |  | $ | 97,552 |
We have recorded income tax and related interest liabilities where we believe certain of our tax positions are not more likely than not to be sustained if challenged. The following table summarizes the activity related to our unrecognized tax benefits:
(In thousands) | 2017 |  | 2016 |  | 2015
Balance at beginning of fiscal year | $ | 184 |  |  | $ | 184 |  |  | $ | 184 |
Increases related to current year tax positions | — |  |  | — |  |  | — |
Additions for tax positions in prior years | — |  |  | — |  |  | — |
Reductions for tax positions in prior years | — |  |  | — |  |  | — |
Reductions due to lapse of applicable statute of limitations | — |  |  | — |  |  | — |
Settlements | — |  |  | — |  |  | — |
Balance at end of fiscal year | $ | 184 |  |  | $ | 184 |  |  | $ | 184 |
Included in the unrecognized tax benefits as of December 30, 2017, and December 31, 2016, were $0.2 million and $0.2 million, respectively, of tax benefits that, if recognized, would reduce our annual effective tax rate. We also accrued an immaterial amount of interest related to these unrecognized tax benefits during fiscal 2017 and 2016, and this amount is reported in “Interest expense” in our Consolidated Statements of Operations and Comprehensive Income (Loss). We do not expect our unrecognized tax benefits to change materially over the next twelve months. We file U.S., state, and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2014 through 2017 tax years generally remain subject to examination by federal and most state and foreign tax authorities.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration