INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Components of Income Before Income Taxes

The components of income before income taxes were as follows for the periods indicated (in thousands):


	Fiscal Year Ended
	December 31, 2022		January 1, 2022		January 2, 2021
Domestic	$	107,578	$	262,182	$	201,919
Foreign	8,599		6,228		3,282
Income before income taxes	$	116,177	$	268,410	$	205,201

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense were as follows for the periods indicated (in thousands):


	Fiscal Year Ended
	December 31, 2022		January 1, 2022		January 2, 2021
Current tax expense:
U.S. federal	$	43,967	$	37,963	$	41,884
State	11,761		11,018		10,619
Foreign	3,372		1,726		829
Total current tax expense	59,100		50,707		53,332
Deferred tax expense (benefit):
U.S. federal	(26,783)		4,770		(3,332)
State	(4,499)		540		(538)
Foreign	(1,334)		(209)		(62)
Total deferred tax expense (benefit)	(32,616)		5,101		(3,932)
Total income tax expense	$	26,484	$	55,808	$	49,400

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of income taxes computed at the federal statutory income tax rate of 21% to the effective income tax rate is as follows for the periods indicated (in thousands):


	Fiscal Year Ended
	December 31, 2022		January 1, 2022		January 2, 2021
Income taxes at the statutory rate	$	24,397	$	56,366	$	43,092
Increase (decrease) resulting from:
State income taxes, net of federal tax effect	4,454		8,562		7,816

Foreign-derived intangible income	(2,878)		(3,056)		(1,046)
Research and development tax credits	(742)		(630)		(580)

Tax benefit related to stock-based compensation	(472)		(7,259)		(611)



Other	1,725		1,825		729
Income tax expense	$	26,484	$	55,808	$	49,400

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consisted of the following for the periods indicated (in thousands):


	Fiscal Year Ended
	December 31, 2022		January 1, 2022
Deferred tax assets:
Accrued liabilities	$	24,339	$	7,188
Allowances and other reserves	3,510		3,350
Inventory	13,022		4,990
Stock-based compensation	5,410		4,298
Operating lease liabilities	16,817		16,201


Capitalized research and development expenditures	7,921		—
Other	4,520		3,225
Total deferred tax assets	$	75,539	$	39,252
Deferred tax liabilities:
Operating lease assets	$	(13,828)	$	(13,516)
Prepaid expenses	(1,286)		(1,602)
Property and equipment	(15,734)		(15,180)
Intangible assets	(21,346)		(18,180)
Other	(112)		(92)
Total deferred tax liabilities	(52,306)		(48,570)
Net deferred tax liabilities	$	23,233	$	(9,318)
Amounts included in the Consolidated Balance Sheets:
Deferred income taxes	$	23,233	$	1,602
Other liabilities	—		(10,920)
Net deferred income tax liabilities	$	23,233	$	(9,318)

Schedule of Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits for the periods indicated (excluding interest and penalties) (in thousands):


	Fiscal Year Ended
	December 31, 2022		January 1, 2022
Balance, beginning of year	$	11,113	$	7,250
Gross increases related to current year tax positions	2,270		4,070
Gross increases related to prior year tax positions	36		—
Gross decreases related to prior year tax positions	(68)		(100)
Decreases as a result of settlements during the current period	(260)		—
Lapse of statute of limitations	(500)		(107)

Balance, end of year	$	12,591	$	11,113