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Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Taxes | Taxes Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities were (in thousands):
Fiscal Year | 2016 |  | 2015
Deferred income tax assets (liabilities): |  |  |
Bad debt allowance | $ | 3,936 |  |  | $ | 5,390 |
Returns allowance | 5,464 |  |  | 8,187 |
Inventory | 15,243 |  |  | 14,575 |
Warranty liabilities | 3,244 |  |  | 2,922 |
Compensation | 19,286 |  |  | 16,213 |
Accrued liabilities | 7,276 |  |  | 7,079 |
Deferred rent | 17,518 |  |  | 10,161 |
Unrealized exchange gains (losses) | (6,498 | ) |  | (2,486 | )
State income tax and interest on tax contingencies | 2,808 |  |  | 2,976 |
Fixed assets | (49,044 | ) |  | (52,782 | )
Trade names and customer lists | (26,166 | ) |  | (26,502 | )
Undistributed earnings of certain foreign subsidiaries | (53,761 | ) |  | (53,761 | )
Foreign accruals | 8,503 |  |  | 4,832 |
Loss carryforwards | 20,898 |  |  | 13,501 |
Tax credit carryforwards | 17,363 |  |  | — |
Valuation allowance | (19,415 | ) |  | (10,857 | )
Other | 529 |  |  | 3,989 |
Net deferred income tax assets (liabilities) | $ | (32,816 | ) |  | $ | (56,563 | )
Total deferred income tax assets | $ | 23,061 |  |  | $ | 18,602 |
Total deferred income tax liabilities | (55,877 | ) |  | (75,165 | )
Net deferred income tax assets (liabilities) | $ | (32,816 | ) |  | $ | (56,563 | )
Operating Loss Carryforwards. The balance sheet includes $18.7 million of net deferred tax assets for operating losses of foreign subsidiaries and $2.2 million of deferred tax assets for net operating losses from an acquired U.S. subsidiary. Valuation allowances have been recorded to reflect the estimated amount of deferred tax assets that may not be realized on these losses. The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):
Expires 2017 through 2021 | $ | 33,413 |
Expires 2022 through 2026 | 8,911 |
Expires 2027 through 2031 | 2,403 |
Expires 2032 through 2036 | 42,358 |
Indefinite | 13,450 |
Total loss carryforwards | $ | 100,535 |
The following table identifies income before income taxes for the Company's U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):
Fiscal Year | 2016 |  | 2015 |  | 2014
U.S | $ | (72,249 | ) |  | $ | 24,864 |  |  | $ | 169,079 |
Non-U.S | 186,557 |  |  | 286,795 |  |  | 388,999 |
Total | $ | 114,308 |  |  | $ | 311,659 |  |  | $ | 558,078 |
The Company's provision for income taxes consisted of the following for the fiscal years indicated (in thousands):
Fiscal Year | 2016 |  | 2015 |  | 2014
Current provision: |  |  |  |  |
U.S. federal | $ | 2,111 |  |  | $ | 10,666 |  |  | $ | 84,669 |
Non-U.S | 53,880 |  |  | 72,336 |  |  | 74,190 |
State and local | (1,482 | ) |  | 1,180 |  |  | 10,582 |
Total current | 54,509 |  |  | 84,182 |  |  | 169,441 |
Deferred provision (benefit): |  |  |  |  |
U.S. federal | (20,216 | ) |  | 1,798 |  |  | 5,124 |
Non-U.S | (5,584 | ) |  | (4,511 | ) |  | (3,622 | )
State and local | (4 | ) |  | 288 |  |  | 524 |
Total deferred | (25,804 | ) |  | (2,425 | ) |  | 2,026 |
Provision for income taxes | $ | 28,705 |  |  | $ | 81,757 |  |  | $ | 171,467 |
The expected cash payments for current U.S. income tax expense for fiscal years 2016, 2015 and 2014 were reduced by approximately $3.3 million, $2.4 million and $4.7 million, respectively, as a result of tax deductions related to the exercise of non-qualified stock options and stock appreciation rights and the vesting of restricted stock and restricted stock units. The expected cash payments for current foreign tax expense for fiscal years 2016, 2015 and 2014 were reduced by $0.2 million, $0.3 million and $0.4 million, respectively, as a result of tax deductions related to the exercise of stock options and the vesting of restricted stock granted to foreign employees. The income tax benefits resulting from these stock-based compensation plans have been recorded to additional paid-in capital in the Company's consolidated balance sheets. Total deferred income tax expense (benefit) of $(25.8) million, $(2.4) million and $2.0 million for fiscal years 2016, 2015 and 2014, respectively, are included in deferred income taxes on the Company's consolidated statements of cash flows. A reconciliation of the U.S. federal statutory income tax rate of 35.0% to the Company's effective tax rate is as follows:
Fiscal Year | 2016 |  | 2015 |  | 2014
Tax at statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Non-deductible expenses | 5.3 |  |  | 0.7 |  |  | 0.4 |
State, net of federal tax benefit | 0.6 |  |  | 0.5 |  |  | 0.9 |
Foreign rate differential | (30.9 | ) |  | (15.6 | ) |  | (12.3 | )
U.S. tax on foreign income | 5.0 |  |  | 4.3 |  |  | 6.3 |
Income tax contingencies | 0.3 |  |  | 0.9 |  |  | 0.7 |
Valuation allowances | 8.1 |  |  | 1.4 |  |  | (0.3 | )
Return to provision true-up | 1.7 |  |  | (1.6 | ) |  | (0.1 | )
Other | — |  |  | 0.6 |  |  | 0.1 |
Provision for income taxes | 25.1 | % |  | 26.2 | % |  | 30.7 | %
Deferred U.S. federal income taxes and foreign withholding taxes are not recorded on undistributed earnings of certain foreign subsidiaries where management plans to continue reinvesting these earnings outside the U.S. The amount of undistributed earnings that would be subject to tax if distributed was approximately $959.0 million at December 31, 2016. Determining tax amounts that would be payable if these earnings were distributed to the U.S. parent company is not practicable. The total amount of unrecognized tax benefits, excluding interest and penalties that would favorably impact the effective tax rate in future periods if recognized, was $20.6 million, $20.0 million and $12.8 million for fiscal years 2016, 2015 and 2014, respectively. The U.S. Internal Revenue Service has completed examinations of the Company's federal income tax returns through 2012. Fiscal years 2013-2016 remain open for federal income tax examination. The Company is also subject to examinations in various state and foreign jurisdictions for its 2010-2016 tax years, none of which the Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty. The Company has classified uncertain tax positions as long-term income taxes payable unless such amounts are expected to be paid within twelve months from December 31, 2016. As of December 31, 2016, the Company had recorded $3.4 million of unrecognized tax benefits, excluding interest and penalties, for positions that could be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable, respectively. The total amount of accrued income tax-related interest in the Company's consolidated balance sheets was $2.3 million and $2.2 million at December 31, 2016 and January 2, 2016, respectively. The total amount of accrued income tax-related penalties in the Company's consolidated balance sheets was $1.4 million and $1.8 million at December 31, 2016 and January 2, 2016, respectively. The Company accrued income tax-related interest expense of $0.1 million, $0.3 million and $0.7 million in fiscal years 2016, 2015 and 2014, respectively. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):
Fiscal Year | 2016 |  | 2015 |  | 2014
Balance at beginning of year | $ | 23,022 |  |  | $ | 20,086 |  |  | $ | 14,314 |
Gross increases tax positions in prior years | 918 |  |  | 1,800 |  |  | 4,234 |
Gross decreases tax positions in prior years | (183 | ) |  | (9,282 | ) |  | (1,018 | )
Gross increases—tax positions in current year | 974 |  |  | 11,909 |  |  | 3,508 |
Settlements | (181 | ) |  | (583 | ) |  | (194 | )
Lapse in statute of limitations | (1,106 | ) |  | (758 | ) |  | (617 | )
Change due to currency revaluation | (45 | ) |  | (150 | ) |  | (141 | )
Balance at end of year | $ | 23,399 |  |  | $ | 23,022 |  |  | $ | 20,086 |

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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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