Note 15 - Income Taxes

12 Months Ended

Jan. 02, 2016

15.	INCOME TAXES

The components of income tax expense (benefit) are as follows:

	Fiscal Years Ended
	January 2, 2016			January 3, 2015
Current
Federal	$	(570	)	$	309
State and local		320			253
Foreign		81			1,320

		(169	)		1,882
Deferred
Federal		944			1,455
State		274			422
Foreign		90			28

		1,308			1,905

Total	$	1,139		$	3,787

The components of earnings before income taxes by United States and foreign jurisdictions were as follows:

	Fiscal Years Ended
	January 2, 2016		January 3, 2015
United States	$	6,642	$	5,979
Foreign Jurisdictions		512		4,622

	$	7,154	$	10,601

The consolidated effective income tax rate for the current year was 15.9% as compared to 35.7% for the comparable prior year period, the difference principally due to the write-off of tax basis goodwill associated with the sale of a business unit in the Company’s Information Technology segment. The income tax provisions reconciled to the tax computed at the statutory Federal rate are:

	January 2, 2016			January 3, 2015
Tax at statutory rate		34.0	%		34.0	%
State income taxes, net of Federal income tax benefit		5.4			4.2
Permanent differences		2.2			(0.2	)
Foreign income tax rate		-			(2.1	)
Tax loss on sale of business unit		(26.9	)		-
Other, net		1.2			(0.2	)
Total income tax expense		15.9	%		35.7	%

A reconciliation of the unrecognized tax benefits for the year January 2, 2016:

Unrecognized Tax Benefits

Balance as of January 3, 2015	$	628
Charges for current year tax positions		-
Reserves for current year tax position		-

Balance as of January 2, 2016	$	628

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits will not change during the next 12 months. However, changes in the occurrence, expected outcomes and timing of those events could cause the Company’s current estimate to change materially in the future.

The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes and records such amounts to interest expense. The Company recorded no expense for penalties or interest in the fiscal years ended January 2, 2016 and January 3, 2015.

At January 2, 2016 and January 3, 2015, deferred tax assets and liabilities consist of the following:

	January 2, 2016			January 3, 2015
Deferred tax assets:
Allowance for doubtful accounts	$	501		$	358
Acquisition amortization, net		352			1,056
Reserves and accruals		393			301
Other		128			511
Total deferred tax assets		1,374			2,226

Deferred tax liabilities:
Prepaid expense deferral		(491	)		(343	)
Bonus depreciation to be reversed		(550	)		(318	)
Canada deferred tax liability, net		(250	)		(160	)
Total deferred tax liabilities		(1,291	)		(821	)
Total deferred tax assets, net	$	83		$	1,405

The Company conducts its operations in multiple tax jurisdictions in the United States, Canada

and Puerto Rico. The Company and its subsidiaries file a consolidated U.S. Federal income tax return and file in various states. The Company’s federal income tax returns have been examined through 2010. The Internal Revenue Service is currently examining fiscal tax years 2011 and 2012. The State of New Jersey is currently examining fiscal tax years 2009 through 2012. Except for New Jersey and other limited exceptions, the Company is no longer subject to audits by state and local tax authorities for tax years prior to 2010. The Company is no longer subject to audit in Canada for the tax years prior to tax year 2010. The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2005.