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Income Taxes | 12 Months Ended
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Dec. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes |
(6) | Income Taxes
Income before provision for income taxes in 2018, 2017 and 2016 consists of the following (in thousands):
|  | 2018 |  |  | 2017 |  |  | 2016 |
U.S. |  | $ | 414,804 |  |  | $ | 386,989 |  |  | $ | 334,892 |
Foreign |  |  | 13,874 |  |  |  | 13,164 |  |  |  | 9,766 |
|  | $ | 428,678 |  |  | $ | 400,153 |  |  | $ | 344,658 |
The differences between the U.S. Federal statutory income tax provision (using the statutory rate of 21% in 2018 and the statutory rate of 35% in 2017 and 2016) and the Company’s consolidated provision for income taxes for 2018, 2017 and 2016 are summarized as follows (in thousands):
|  | 2018 |  |  | 2017 |  |  | 2016 |
Federal income tax provision based on the statutory rate |  | $ | 90,022 |  |  | $ | 140,054 |  |  | $ | 120,630 |
State and local income taxes, net of related Federal income taxes |  |  | 14,233 |  |  |  | 11,520 |  |  |  | 9,787 |
Non-resident withholding and foreign income taxes |  |  | 21,369 |  |  |  | 20,210 |  |  |  | 17,275 |
Foreign tax and other tax credits |  |  | (25,301 | ) |  |  | (23,324 | ) |  |  | (20,049 | )
Foreign derived intangible income |  |  | (11,760 | ) |  |  | — |  |  |  | — |
Excess tax benefits from equity-based compensation |  |  | (23,786 | ) |  |  | (27,227 | ) |  |  | — |
Non-deductible expenses, net |  |  | 1,999 |  |  |  | 1,794 |  |  |  | 1,579 |
Unrecognized tax provision (benefit), net of related Federal income taxes |  |  | 301 |  |  |  | (173 | ) |  |  | (98 | )
Other |  |  | (371 | ) |  |  | (606 | ) |  |  | 856 |
|  | $ | 66,706 |  |  | $ | 122,248 |  |  | $ | 129,980 |
The Company adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during 2017, which is intended to simplify several areas of accounting for share-based compensation arrangements. As a result, excess tax benefits or deficiencies from equity-based compensation activity are now reflected in the Company’s consolidated statements of income as a component of the provision for income taxes, whereas they previously were recognized in the consolidated statement of stockholders’ deficit. The adoption of ASU 2016-09 resulted in a decrease in the Company’s provision for income taxes of $23.8 million in 2018 and $27.2 million in 2017, primarily due to the recognition of excess tax benefits for options exercised and the vesting of equity awards. The components of the 2018, 2017 and 2016 consolidated provision for income taxes are as follows (in thousands):
|  | 2018 |  |  | 2017 |  |  | 2016 |
Provision for Federal income taxes |  |  |  |  |  |  |  |  |  |  |  |
Current provision |  | $ | 33,558 |  |  | $ | 81,747 |  |  | $ | 100,673 |
Deferred provision (benefit) |  |  | (1,543 | ) |  |  | 6,732 |  |  |  | (3,096 | )
Total provision for Federal income taxes |  |  | 32,015 |  |  |  | 88,479 |  |  |  | 97,577 |
Provision for state and local income taxes |  |  |  |  |  |  |  |  |  |  |  |
Current provision |  |  | 12,651 |  |  |  | 14,131 |  |  |  | 15,091 |
Deferred provision (benefit) |  |  | 671 |  |  |  | (572 | ) |  |  | 37 |
Total provision for state and local income taxes |  |  | 13,322 |  |  |  | 13,559 |  |  |  | 15,128 |
Provision for non-resident withholding and foreign income taxes |  |  | 21,369 |  |  |  | 20,210 |  |  |  | 17,275 |
|  | $ | 66,706 |  |  | $ | 122,248 |  |  | $ | 129,980 |
As of December 30, 2018 and December 31, 2017, the significant components of net deferred income taxes are as follows (in thousands):
|  | 2018 |  |  | 2017 |
Deferred income tax assets |  |  |  |  |  |  |  |
Insurance reserves |  | $ | 10,253 |  |  | $ | 9,957 |
Equity compensation |  |  | 9,705 |  |  |  | 9,277 |
Other accruals and reserves |  |  | 10,636 |  |  |  | 8,532 |
Foreign tax credit |  |  | 4,600 |  |  |  | — |
Other |  |  | 6,029 |  |  |  | 4,801 |
Total deferred income tax assets |  |  | 41,223 |  |  |  | 32,567 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Depreciation, amortization and asset basis differences |  |  | 10,505 |  |  |  | 4,655 |
Capitalized software |  |  | 25,192 |  |  |  | 22,248 |
Gain on debt extinguishments |  |  | — |  |  |  | 2,914 |
Total deferred income tax liabilities |  |  | 35,697 |  |  |  | 29,817 |
Net deferred income taxes |  | $ | 5,526 |  |  | $ | 2,750 |
As of December 30, 2018, the Company had unused foreign tax credits of $4.6 million which can be carried back for one year to be fully utilized against its U.S. federal income tax liability. Realization of the Company’s deferred tax assets is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income. Although realization of the Company’s net deferred tax assets is not assured, management believes it is more likely than not that the net deferred tax assets will be realized. On an ongoing basis, management will assess whether it remains more likely than not that the net deferred tax assets will be realized. For financial reporting purposes, the Company’s investment in foreign subsidiaries does not exceed its tax basis. Therefore, no deferred income taxes have been provided. The Company recognizes the financial statement benefit of a tax position if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and penalties in income tax expense. At December 30, 2018, the amount of unrecognized tax benefits was $2.0 million of which, if ultimately recognized, $1.8 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. At December 30, 2018, the Company had less than $0.1 million of accrued interest and no accrued penalties. At December 31, 2017, the amount of unrecognized tax benefits was $1.8 million of which, if ultimately recognized, $1.5 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. At December 31, 2017, the Company had less than $0.1 million of accrued interest and no accrued penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance as of January 3, 2016 |  | $ | 2,115 |
Additions for tax positions of current year |  |  | 209 |
Reductions in tax positions from prior years for: |  |  |  |
Changes in prior year tax positions |  |  | (33 | )
Lapses of applicable statute of limitations |  |  | (337 | )
Balance as of January 1, 2017 |  |  | 1,954 |
Additions for tax positions of current year |  |  | 224 |
Additions for tax positions of prior years |  |  | 42 |
Reductions in tax positions from prior years for: |  |  |  |
Changes in prior year tax positions |  |  | (10 | )
Lapses of applicable statute of limitations |  |  | (373 | )
Balance as of December 31, 2017 |  |  | 1,837 |
Additions for tax positions of current year |  |  | 425 |
Additions for tax positions of prior years |  |  | 115 |
Reductions in tax positions from prior years for: |  |  |  |
Changes in prior year tax positions |  |  | (64 | )
Lapses of applicable statute of limitations |  |  | (349 | )
Balance as of December 30, 2018 |  | $ | 1,964 |
The Company is currently under examination by the IRS for the 2015 tax year. The Company continues to be under examination by certain states. The Company’s Federal statute of limitation has expired for years prior to 2015 and the relevant state and foreign statutes vary. The Company expects the current ongoing examinations to be concluded in the next twelve months and does not expect the assessment of any significant additional amounts in excess of amounts reserved. Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the “2017 Tax Act”), which was enacted on December 22, 2017, had a significant impact on the Company’s consolidated provision for income taxes for the year ended December 30, 2018. The most significant impacts include but are not limited to reducing the U.S. corporate income tax rate from 35 percent to 21 percent, establishing a deduction for foreign derived intangible income and imposing new limitations on certain executive compensation and foreign tax credits. The Company recognized the enactment-date income tax effects of the 2017 Tax Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes , in the reporting period in which the 2017 Tax Act was signed into law. As of December 30, 2018, the Company has completed its accounting for all enactment-date tax effects of the 2017 Tax Act and current period adjustments related to these items were immaterial.

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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