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Income Taxes
 12 Months Ended
Dec. 29, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income (loss) before income taxes included the following (in millions):
202420232022
Domestic operations$527.4 $532.4 $490.3 
Foreign operations410.5 426.5 417.8 
Total income (loss) before income taxes$937.9 $958.9 $908.1 
The provision for income taxes included the following (in millions):
202420232022
Current provision (benefit)   
Federal$149.3 $91.2 $47.2 
State25.5 21.4 14.8 
Foreign40.5 57.1 47.8 
Total current provision (benefit)215.3 169.7 109.8 
Deferred provision (benefit)   
Federal(55.8)(78.8)(39.0)
State(7.7)(4.6)0.3 
Foreign(34.6)(14.0)48.1 
Total deferred provision (benefit)(98.1)(97.4)9.4 
Provision (benefit) for income taxes$117.2 $72.3 $119.2 
The following is a reconciliation of the statutory federal income tax rate to the actual effective income tax rate:
202420232022
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State and local taxes, net of federal benefit2.4 1.8 1.7 
Research and development tax credits(1.3)(2.4)(1.8)
Investment tax credits(0.8)(0.5)(0.5)
Foreign rate differential2.6 1.8 1.5 
Net accruals (reversals) for unrecognized tax benefits (8.5)(10.8)(7.9)
Stock-based compensation(1.4)(2.1)(1.1)
U.S. export sales(1.9)(2.2)(2.0)
Other0.4 0.9 2.2 
Effective income tax rate12.5%7.5 %13.1 %
Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes, and differences between the fair value of assets acquired in business combinations accounted for as purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax benefits or costs to be recognized when those temporary differences reverse.
The categories of assets and liabilities that have resulted in differences in the timing of the recognition of income and expense were as follows (in millions):
Deferred income tax assets:20242023
Long-term:  
Accrued liabilities$33.9 $29.5 
Inventory valuation22.4 29.1 
Accrued vacation7.9 8.1 
Deferred compensation and other benefit plans15.1 14.5 
Operating lease liabilities21.6 27.9 
Capitalization of research and development 165.0 141.1 
Tax credit and net operating loss carryforward33.2 39.3 
    Other 30.0 34.8 
Valuation allowance(20.2)(18.2)
Total deferred income tax assets308.9 306.1 
Deferred income tax liabilities:  
Long-term:  
Intangible amortization587.0 638.7 
Property, plant and equipment differences28.4 29.0 
Operating lease right-of-use assets 18.9 25.3 
Unremitted earnings of foreign subsidiaries7.4 3.6 
Other 9.5 12.4 
Total deferred income tax liabilities651.2 709.0 
Net deferred income tax liabilities $342.3 $402.9 
The Company is not permanently reinvested with respect to unremitted earnings of most of its foreign subsidiaries. The Company is subject to U.S. income tax on substantially all of these foreign earnings, while any remaining foreign earnings are eligible for potential U.S. tax deductions. As of December 29, 2024, the incremental tax cost to repatriate these earnings was not material.
The Company continues to make an indefinite reinvestment assertion on the unrepatriated prior year earnings of its material subsidiaries in Canada. Those unremitted earnings were used to finance Canadian operations and investments. The Company estimates that future cash generation will be sufficient to meet future domestic cash requirements. The unrecognized deferred tax liability for the historical unremitted Canadian earnings is estimated between at $23.0 million to $26.0 million of potential tax.
In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences, projected future taxable income, availability of taxable income in carryback periods and tax planning strategies. Based on a review of such information, management believes that it is possible that some portion of deferred tax assets will not be realized as a future benefit and therefore has recorded a valuation allowance. The valuation allowance for deferred tax assets increased by $2.0 million in 2024.
At December 29, 2024, the Company had approximately $21.7 million of net operating loss carryforward from the Company’s foreign entities including Denmark and The Netherlands, of which $13.1 million have no expiration dates and $8.6 million have expiration dates ranging from 2025 to 2044. The Company had Canadian capital loss carryforward in the amount of $3.3 million which has no expiration date. In addition, the Company had domestic federal and state net operating loss carryforward of $15.3 million and $192.6 million, respectively. Generally, federal net operating loss carryforward amounts are limited in their use by earnings of certain acquired subsidiaries. Of the $15.3 million federal net operating loss carryforward, $14.5 million have no expiration dates and $0.8 million have expiration dates ranging from 2025 to 2036. The state net operating loss carryforward amounts have expiration dates ranging from 2025 to 2043.
The Company had aggregate Canadian federal and provincial investment tax credits of $10.8 million, which have expiration dates ranging from 2030 to 2042. The Company had United States federal credit carryforward of $4.6 million which have expiration dates ranging from 2031 to 2042. The Company had Spanish federal research and development credit carryforward in the amount of $2.8 million, which have expiration dates ranging from 2025 to 2042. Finally, the Company had state tax credits of $10.6 million, of which $5.5 million have no expiration date and $5.1 million have expiration dates ranging from 2025 to 2048.
Unrecognized tax benefits (in millions):202420232022
Beginning of year (a)$96.5 $162.8 $402.0 
Increase due to business combinations— 18.6 — 
Increase for tax positions taken during the current period1.8 3.4 2.7 
Increase in prior year tax positions1.0 3.0 0.2 
Reduction related to settlements with taxing authorities(46.6)— (223.3)
Reduction related to lapse of the statute of limitations(17.6)(96.3)(26.4)
Impact of exchange rate changes10.1 5.0 7.6 
End of year (a)$45.2 $96.5 $162.8 
(a) Beginning and end of year balances include amounts offset by deferred tax and amounts offset by potential refunds in other taxing jurisdictions.
In the next 12 months, the Company anticipates the total unrecognized tax benefit for various federal, state and foreign tax items may be reduced by $11.9 million due to the expiration of statutes of limitation for various federal, state and foreign tax issues.
Teledyne recognized net tax benefits and expense for interest and penalties related to unrecognized tax benefits within the provision for income taxes in our statements of income (loss) of $15.8 million of benefits, $10.3 million of benefits and $12.2 million of benefits, for 2024, 2023 and 2022, respectively. Interest and penalties in the amount of $8.5 million, $36.9 million and $45.6 million were recognized in the 2024, 2023 and 2022 balance sheets, respectively. Substantially all of the unrecognized tax benefits as of December 29, 2024, if recognized, would affect our effective tax rate.
Teledyne files income tax returns in the United States federal and state jurisdictions and in various foreign jurisdictions. The Company has substantially concluded income tax matters in the United States through 2016, in Canada through 2012, in the United Kingdom through 2016, and in France through 2020.
Cash payments for federal, state and foreign income taxes were $213.2 million for 2024, which are net of $20.1 million in tax refunds. Cash payments for federal, state and foreign income taxes were $313.0 million for 2023, which are net of $14.7 million in tax refunds. Cash payments for federal, state and foreign income taxes were $212.4 million for 2022, which are net of $20.1 million in tax refunds.