Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 28, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The following table presents income before income taxes used to calculate the provision for income taxes:
Year Ended December
(In thousands) 2024 2023 2022
Domestic $ 153,220  $ 128,026  $ 153,936 
Foreign 148,203  143,873  165,200 
Income before income taxes $ 301,423  $ 271,899  $ 319,136 
The following table presents components of the provision for income taxes:
Year Ended December
(In thousands) 2024 2023 2022
Current:
Federal $ 44,248  $ 26,290  $ 53,990 
Foreign 12,793  16,950  12,397 
State 5,286  1,415  7,129 
Total current income taxes 62,327  44,655  73,516 
Deferred:
Federal and state (6,838) 6,848  (9,828)
Foreign 132  (10,598) 9,955 
Total deferred income taxes (6,706) (3,750) 127 
Total provision for income taxes $ 55,621  $ 40,905  $ 73,643 
The following table presents a reconciliation of the differences between income taxes computed by applying the statutory federal income tax rate and "income taxes" recorded in the Company's statements of operations:
Year Ended December
(In thousands) 2024 2023 2022
Tax at federal statutory rate $ 63,299  $ 57,099  $ 67,019 
State income tax, net of federal tax benefit 3,677  2,614  4,542 
Foreign rate differences (22,860) (20,354) (9,849)
Employee compensation 2,169  1,216  2,121 
Change in valuation allowance 3,165  (5,089) 4,881 
Global intangible low-tax income ("GILTI") 8,674  5,518  3,586 
Other (2,503) (99) 1,343 
Income taxes $ 55,621  $ 40,905  $ 73,643 
Foreign rate differences include tax benefits of $7.2 million, $5.4 million and $10.3 million in 2024, 2023 and 2022, respectively, from statutorily exempt foreign income.
During the year ended December 2023, the Company was granted local income tax credits in a foreign jurisdiction totaling $65.5 million that will expire in 2031. A full valuation allowance was recorded against these tax credits in the Company's financial statements and has been presented net in the table above.
The following table presents the components of "deferred income tax assets" and "deferred income tax liabilities" recorded in the Company's balance sheets:
(In thousands) December 2024 December 2023
Deferred income tax assets:
Inventories $ 9,209  $ 11,592 
Deferred compensation 11,133  10,290 
Other employee benefits 10,425  7,989 
Stock-based compensation 3,837  4,139 
Other accrued expenses 9,750  16,741 
Intangible assets 28,840  29,232 
Leases 12,059  12,055 
Operating loss carryforwards 33,275  30,871 
Tax credit carryforwards 65,563  69,221 
Gross deferred income tax assets 184,091  192,130 
Less: valuation allowance (82,565) (86,213)
Net deferred income tax assets 101,526  105,917 
Deferred income tax liabilities:
Leases 11,423  11,595 
Depreciation 17,102  20,929 
Taxes on unremitted earnings 2,658  3,923 
Deferred income tax liabilities 31,183  36,447 
Total net deferred income tax assets $ 70,343  $ 69,470 
Amounts included in the balance sheets:
Deferred income tax assets $ 76,065  $ 75,081 
Deferred income tax liabilities (5,722) (5,611)
$ 70,343  $ 69,470 
At the end of 2024, the Company is asserting indefinite reinvestment on foreign earnings totaling $139.0 million. The Company has determined the unrecorded deferred tax liability associated with the $139.0 million basis difference is approximately $1.0 million, primarily related to withholding taxes.
The Company has $60.9 million of local income tax credit carryforwards in a foreign jurisdiction that will expire in 2031, $27.1 million of potential tax benefits for foreign operating loss carryforwards, $24.0 million of which will expire between 2025 and 2034, and $4.4 million of foreign tax credit carryforwards that will expire between 2030 and 2034. In addition, there are $6.4 million of potential tax benefits for state operating loss and credit carryforwards, $5.0 million of which expire between 2025 and 2044.
A valuation allowance has been provided where it is more likely than not that deferred tax assets related to operating loss and tax credit carryforwards will not be realized. Valuation allowances totaled $60.9 million for local income tax credit carryforwards, $13.0 million for foreign operating loss carryforwards, $4.6 million for state operating loss and credit carryforwards, $2.7 million for other foreign deferred income tax assets and $1.4 million for other federal deferred income tax assets.
During 2024, the Company recorded a $4.6 million decrease in valuation allowances related to local income tax credits due to the impact of foreign currency effects. In addition, the Company recorded tax expense of $2.5 million due to a net increase in valuation allowances related to current year foreign operating losses and other deferred income tax assets, inclusive of foreign currency effects. The Company also recorded a tax benefit due to a $1.5 million decrease in valuation allowances related to state operating loss and credit carryforwards as well as other state deferred income tax assets.
The following table presents a reconciliation of the change in the accrual for unrecognized income tax benefits:
(In thousands) Unrecognized Income Tax Benefits Accrued Interest and Penalties Unrecognized Income Tax Benefits
Including Interest
and Penalties
Balance, December 2021 $ 11,717  $ 5,049  $ 16,766 
Additions for current year tax positions 169  —  169 
Additions for prior year tax positions 853  857  1,710 
Reductions for prior year tax positions —  (30) (30)
Reductions due to statute expirations (137) (58) (195)
Balance, December 2022 12,602  5,818  18,420 
Additions for current year tax positions 248  —  248 
Additions for prior year tax positions 79  931  1,010 
Reductions for prior year tax positions (345) (140) (485)
Reductions due to statute expirations (2,249) (296) (2,545)
Balance, December 2023 10,335  6,313  16,648 
Additions for current year tax positions 245  —  245 
Additions for prior year tax positions 169  857  1,026 
Reductions due to statute expirations (1,775) (888) (2,663)
Balance, December 2024 $ 8,974  $ 6,282  $ 15,256 
(In thousands) December 2024 December 2023
Amounts included in the balance sheets:
Unrecognized income tax benefits, including interest and penalties $ 15,256  $ 16,648 
Less: deferred tax benefits (2,726) (3,035)
Total unrecognized tax benefits $ 12,530  $ 13,613 
The unrecognized tax benefits of $12.5 million at the end of 2024, if recognized, would reduce tax expense and the annual effective tax rate.
The Company files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. In the U.S., the Company’s 2021 through 2023 tax years are currently under examination by the Internal Revenue Service. In addition, the Company is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company’s provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on the Company’s financial statements. Management does not believe that the amount of unrecognized tax benefits will materially decrease within the next 12 months.