Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.6.0.2
Income Taxes
12 Months Ended
Dec. 31, 2016
Income Taxes [Abstract]  
Income Taxes

NOTE D – INCOME TAXES









 

 

 

 

 

 



 

 

 

 

 

 

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



 

 

 

 

 

 



 

Year ended



 

2014

 

2015

 

2016



 

 

 

 

 

 

Current

 

 

 

 

 

 

Federal

 

$             22,362

 

$             17,492

 

$             (4,361)

State

 

1,056 

 

464 

 

756 

Foreign

 

16,265 

 

32,198 

 

45,568 



 

 

 

 

 

 

Total Current

 

39,683 

 

50,154 

 

41,963 



 

 

 

 

 

 

Deferred

 

 

 

 

 

 

Federal

 

(1,096)

 

(5,220)

 

(6,813)

State

 

(43)

 

(155)

 

(67)

Foreign

 

473 

 

3,138 

 

3,428 



 

 

 

 

 

 

Total Deferred

 

(666)

 

(2,237)

 

(3,452)



 

 

 

 

 

 



 

$             39,017

 

$             47,917

 

$             38,511







 

 

 

 

 

 



 

 

 

 

 

 

The income tax provision, as reconciled to the tax computed at the federal statutory rate of 35% for 2014, 2015, and

2016, is as follows:

 

 

 

 

 

 



 

Year ended



 

2014

 

2015

 

2016



 

 

 

 

 

 

Federal income taxes at statutory rate

 

$             40,479

 

$             49,906

 

$             48,493

State income taxes, net of federal tax benefit

 

653 

 

670 

 

689 

Excess tax benefits on equity awards

 

 -

 

 -

 

(9,140)

Qualified production activities deduction

 

(887)

 

(952)

 

(856)

Foreign rate differential

 

(603)

 

(461)

 

(337)

U.S. research credit

 

(293)

 

(425)

 

(339)

All other, net

 

(332)

 

(821)

 



 

 

 

 

 

 



 

$             39,017

 

$             47,917

 

$             38,511



 

 

 

 

 

 

NOTE D – INCOME TAXES – CONTINUED







 

 

 

 



 

 

 

 

The significant categories of deferred taxes are as follows:



 

January 2,

 

December 31,



 

2016

 

2016

Deferred tax assets

 

 

 

 

Inventory

 

$              3,341

 

$              3,315

Accruals not currently deductible

 

5,892 

 

5,233 

Equity-based compensation expense

 

4,476 

 

7,198 

Intangible assets

 

9,283 

 

8,591 

Accumulated other comprehensive income

 

988 

 

3,943 

Tax credit carry forwards

 

 -

 

3,698 

Net operating losses

 

110 

 

424 

Other

 

3,428 

 

4,365 



 

 

 

 

Gross deferred tax assets

 

27,518 

 

36,767 

Valuation allowance

 

(607)

 

(640)



 

 

 

 

Net deferred tax assets

 

26,911 

 

36,127 



 

 

 

 

Deferred tax liabilities

 

 

 

 

Depreciation/amortization

 

(6,137)

 

(7,016)

Prepaid expenses

 

(1,566)

 

(2,222)

Intangible assets

 

(9,283)

 

(8,591)

Other

 

(4,663)

 

(5,505)



 

 

 

 

Gross deferred tax liabilities

 

(21,649)

 

(23,334)



 

 

 

 

Net deferred taxes

 

$              5,262

 

$            12,793



 

 

 

 



 

 

 

 



 

 

 

 

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

 

 



 

 

 

 



 

January 2,

 

December 31,



 

2016

 

2016



 

 

 

 

Net current deferred tax assets

 

$              9,674

 

$                     -

Net noncurrent deferred tax assets

 

9,844 

 

18,292 

Net current deferred tax liabilities

 

(4,434)

 

 -

Net noncurrent deferred tax liabilities

 

(9,822)

 

(5,499)



 

 

 

 

Net deferred taxes

 

$              5,262

 

$            12,793



At December 31, 2016, the Company had foreign operating loss carry forwards of approximately $1,444.  If these operating losses are not used, a portion of them will begin to expire in 2017.  A valuation allowance of $424 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 D – INCOME TAXES – CONTINUED



Also at December 31, 2016, the Company reported U.S. foreign tax credit carry forwards of $3,351.  These foreign tax credits can carry forward for 10 years and will not expire until 2026 The Company also reported $339 of U.S. research credit carry forwards.  These research credit carry forwards can be carried forward for 20 years and will not expire until 2036.  Because these carry-forward credits are expected to be utilized before expiration, no valuation allowance has been provided.



The Company has not recognized a deferred tax liability for the undistributed earnings of certain of its foreign operations that arose during 2016 and in prior years as the Company considers these earnings to be indefinitely reinvested.  As of December 31, 2016, the undistributed earnings of these subsidiaries was $19,597The repatriation of these earnings would result in a tax liability to the Company of approximately $3,083



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 January 2, 2016 and December 31, 2016, 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 2013 under most circumstances.  Certain taxing jurisdictions may provide for additional open years depending upon their statutes or if an audit is on-going.