USANA Health Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Jan. 03, 2015

NOTE E – INCOME TAXES



Income tax expense (benefit) included in income from net earnings consists of the following:

	Year ended
	2012	2013	2014

Current
Federal	$ 27,779	$ 26,233	$ 22,362
State	1,141	94	1,056
Foreign	4,051	9,626	16,265

Total Current	32,971	35,953	39,683

Deferred
Federal	(145)	5,507	(1,096)
State	94	(5)	(43)
Foreign	(927)	(3,898)	473

Total Deferred	(978)	1,604	(666)

	$ 31,993	$ 37,557	$ 39,017



The income tax provision, as reconciled to the tax computed at the federal statutory rate of 35% for 2012, 2013, and
2014, is as follows:
	Year ended
	2012	2013	2014

Federal income taxes at statutory rate	$ 34,449	$ 40,803	$ 40,479
State income taxes, net of federal tax benefit	1,201	102	653
Qualified production activities deduction	(2,651)	(1,700)	(887)
Foreign rate differential	(337)	(890)	(603)
All other, net	(669)	(758)	(625)

	$ 31,993	$ 37,557	$ 39,017

NOTE E – INCOME TAXES – CONTINUED



The significant categories of deferred taxes are as follows:
	December 28,	January 3,
	2013	2015
Deferred tax assets
Inventory differences	$ 3,111	$ 3,024
Accruals not currently deductible	5,345	4,427
Equity-based compensation	2,779	2,822
Intangible assets	10,590	10,107
Net operating losses	530	526
Other	2,315	4,543

Gross deferred tax assets	24,670	25,449
Valuation allowance	(530)	(526)

Net deferred tax assets	24,140	24,923

Deferred tax liabilities
Depreciation/amortization	(5,323)	(6,171)
Accumulated other comprehensive income	(3,418)	(1,994)
Prepaid expenses	(1,370)	(1,431)
Intangible assets	(10,590)	(10,107)
Other	(5,268)	(5,473)

Gross deferred tax liabilities	(25,969)	(25,176)

Net deferred taxes	$ (1,829)	$ (253)



The Components of deferred taxes, net on a jurisdiction basis are as follows:

	December 28,	January 3,
	2013	2015

Net current deferred tax assets	$ 8,588	$ 9,683
Net noncurrent deferred tax assets	5,519	5,933
Net current deferred tax liabilities	(5,070)	(5,268)
Net noncurrent deferred tax liabilities	(10,866)	(10,601)

Net deferred taxes	$ (1,829)	$ (253)

At January 3, 2015, the Company had foreign operating loss carry forwards of approximately $1,901. If these operating losses are not used, a portion of them will begin to expire in 2017. A valuation allowance of $526 has been placed on these foreign operating loss carry forwards. The valuation allowance is determined using a more likely than not realization criteria and is based upon all available positive and negative evidence, including future reversals of temporary differences. A future increase or decrease in the current valuation allowance is not expected to impact the income tax provision due to the Company’s ability to fully utilize foreign tax credits associated with taxable income in these jurisdictions.

NOTE E – INCOME TAXES – CONTINUED

The Company has not recognized a deferred tax liability for the undistributed earnings of certain of its foreign operations that arose during 2014 and in prior years as the Company considers these earnings to be indefinitely reinvested. As of January 3, 2015, the undistributed earnings of these subsidiaries was $12,296. The hypothetical repatriation of these earnings would result in a tax liability to the Company of approximately $1,537.

The Company recognizes the impact of a tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. As of December 28, 2013 and January 3, 2015, the Company had no significant unrecognized tax benefits.

From time to time, the Company is subject to federal, state, and foreign tax authority income tax examinations. The Company remains subject to income tax examinations for each of its open tax years, which extend back to 2011 under most circumstances. Certain taxing jurisdictions may provide for additional open years depending upon their statutes or if an audit is on-going.

- 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.

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