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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes |
12. | Income Taxes
The following tables summarize the Company’s consolidated provision for US federal, state and foreign taxes on income:
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
US federal |  | $ | (15,254 | ) |  | $ | (6,862 | ) |  | $ | 12,904 |
State |  |  | 604 |  |  |  | 1,859 |  |  |  | (131 | )
Foreign |  |  | 20,191 |  |  |  | 15,740 |  |  |  | 24,059 |
|  | $ | 5,541 |  |  | $ | 10,737 |  |  | $ | 36,832 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
US federal |  | $ | 10,980 |  |  | $ | 10,756 |  |  | $ | 25,162 |
State |  |  | 1,877 |  |  |  | 1,890 |  |  |  | 2,876 |
Foreign |  |  | (1,764 | ) |  |  | (548 | ) |  |  | 1,061 |
|  | $ | 11,093 |  |  | $ | 12,098 |  |  | $ | 29,099 |
Total tax provision |  | $ | 16,634 |  |  | $ | 22,835 |  |  | $ | 65,931 |
The components of the Company’s consolidated income before income taxes consist of the following:
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
Domestic |  | $ | 26,367 |  |  | $ | 6,299 |  |  | $ | 88,024 |
Foreign |  |  | 57,760 |  |  |  | 49,315 |  |  |  | 95,640 |
|  | $ | 84,127 |  |  | $ | 55,614 |  |  | $ | 183,664 |
The effective tax rates for the fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015 were 19.8%, 41.1% and 35.9%, respectively. The difference between the US federal statutory tax rate and the Company’s consolidated effective tax rate is as follows:
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
US federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Research and development credit |  |  | (19.5 | ) |  |  | 0.0 |  |  |  | 0.0 |
Reserves for uncertain tax positions |  |  | 2.9 |  |  |  | 3.5 |  |  |  | 0.4 |
Out-of-period adjustments |  |  | 2.6 |  |  |  | 4.5 |  |  |  | 0.0 |
States income taxes (net of federal benefit) |  |  | 2.0 |  |  |  | 3.8 |  |  |  | 1.3 |
Foreign taxes |  |  | (0.1 | ) |  |  | (0.4 | ) |  |  | (0.6 | )
(Decrease) increase in valuation allowance |  |  | (2.3 | ) |  |  | (2.2 | ) |  |  | 1.7 |
Loss on closure of China |  |  | 0.0 |  |  |  | 0.0 |  |  |  | (2.1 | )
Other |  |  | (0.8 | ) |  |  | (3.1 | ) |  |  | 0.2 |
Effective tax rate |  |  | 19.8 | % |  |  | 41.1 | % |  |  | 35.9 | %
The Company’s effective tax rate for fiscal year ended December 31, 2016 was affected by a net tax benefit arising from a research and development tax credit and a Section 199 deduction for the tax years 2012 through 2016 and the reversal of a valuation allowance related to tax benefits for foreign losses that are now expected to be realized. These benefits were partially offset by income tax expenses recorded for out-of-period adjustments. The deferred tax assets and liabilities recorded on the Company’s consolidated balance sheets are as follows:
|  | December 31, 2016 |  |  | January 2, 2016 |
Provision for estimated expenses |  | $ | 4,269 |  |  | $ | 4,638 |
Depreciation |  |  | 2,230 |  |  |  | 4,164 |
Operating loss carryforwards |  |  | 24,560 |  |  |  | 34,285 |
Salaries and wages |  |  | 2,832 |  |  |  | 641 |
Share-based compensation |  |  | 13,374 |  |  |  | 14,330 |
Foreign tax credit carryforwards |  |  | 4,075 |  |  |  | 0 |
Other |  |  | 12,154 |  |  |  | 8,024 |
Other comprehensive income |  |  | 18,001 |  |  |  | 24,778 |
Less: valuation allowance |  |  | (18,270 | ) |  |  | (28,279 | )
Total deferred tax assets |  | $ | 63,225 |  |  | $ | 62,581 |
Other |  | $ | (1,209 | ) |  | $ | (1,823 | )
Amortization |  |  | (229,559 | ) |  |  | (210,901 | )
Total deferred tax liabilities |  | $ | (230,768 | ) |  | $ | (212,724 | )
Net deferred tax liabilities |  | $ | (167,543 | ) |  | $ | (150,143 | )
Certain foreign operations of the Company have generated net operating loss carryforwards. If it has been determined that it is more-likely-than-not that the deferred tax assets associated with these net operating loss carryforwards will not be utilized, a valuation allowance has been recorded. As of December 31, 2016 and January 2, 2016, various foreign subsidiaries had net operating loss carryforwards of approximately $98,546 and $138,562, respectively, most of which can be carried forward indefinitely. The Company’s undistributed earnings of substantially all of its foreign subsidiaries are not considered to be permanently reinvested. Accordingly, the Company has recorded all taxes, after taking into account foreign tax credits, on the undistributed earnings of these foreign subsidiaries. The undistributed earnings of the remaining foreign subsidiaries are indefinitely invested outside the United States. We have not recorded a deferred tax liability of approximately $11,195 for the U.S. income taxes on the undistributed earnings of these foreign subsidiaries. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | December 31, 2016 |  |  | January 2, 2016 |  |  | January 3, 2015 |
Balance at beginning of year |  | $ | 7,698 |  |  | $ | 6,268 |  |  | $ | 5,784 |
Additions based on tax positions related to the current year |  |  | 4,580 |  |  |  | 2,106 |  |  |  | 1,304 |
Reductions for tax positions of prior years |  |  | (3,299 | ) |  |  | (676 | ) |  |  | (820 | )
Balance at end of year |  | $ | 8,979 |  |  | $ | 7,698 |  |  | $ | 6,268 |
At December 31, 2016, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $8,703. As of December 31, 2016, given the nature of the Company’s uncertain tax positions, it is reasonably possible that there will not be a significant change in the Company’s uncertain tax benefits within the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company had $452 and $1,229 of accrued interest and penalties at December 31, 2016 and January 2, 2016, respectively. The Company recognized $(777), $(266), and $83 in interest and penalties during the fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015, respectively. The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction, and various state and foreign jurisdictions. At December 31, 2016, with few exceptions, the Company was no longer subject to US federal, state or local income tax examinations by tax authorities for years prior to 2013, or non-US income tax examinations by tax authorities for years prior to 2009.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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