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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes by jurisdiction is as follows:
| 2017 |  | 2016 |  | 2015
| (In thousands)
U.S. | $ | 773,160 |  |  | $ | 532,853 |  |  | $ | 920,250 |
Foreign | 208,906 |  |  | 191,183 |  |  | 81,074 |
Total | $ | 982,066 |  |  | $ | 724,036 |  |  | $ | 1,001,324 |
The components of income tax expense (benefit) are set forth below:
| 2017 |  | 2016 |  | 2015
| (In thousands)
Current: |  |  |
Federal | $ | 213,146 |  |  | $ | 165,989 |  |  | $ | 248,821 |
Foreign | 65,100 |  |  | 62,753 |  |  | 43,640 |
State and other | 35,614 |  |  | 20,211 |  |  | 26,019 |
Total current | 313,860 |  |  | 248,953 |  |  | 318,480 |
Deferred: |  |  |  |  |
Federal | (19,434 | ) |  | (3,529 | ) |  | 32,819 |
Foreign | (34,264 | ) |  | (2,490 | ) |  | (19,695 | )
State and other | 3,737 |  |  | 985 |  |  | 6,748 |
Total deferred | (49,961 | ) |  | (5,034 | ) |  | 19,872 |
| $ | 263,899 |  |  | $ | 243,919 |  |  | $ | 338,352 |
The effective tax rate for 2017 was 26.9% compared to 34.6% for 2016 and 34.9% for 2015. The following table reconciles the statutory U.S. federal income tax rate to the Company’s effective income tax rate:
| 2017 |  | 2016 |  | 2015 |
Federal income tax rate | 35.0 |  | % | 35.0 |  | % | 35.0 |  | %
State tax rate, net | 2.6 |  |  | 2.4 |  |  | 2.3 |  |
Domestic production activity | (1.6 | ) |  | (1.3 | ) |  | (1.9 | ) |
Difference in U.S. statutory tax rate and foreign country effective tax rate | (1.4 | ) |  | (1.4 | ) |  | (0.9 | ) |
Rate change | (5.3 | ) |  | — |  |  | — |  |
Tax credits | (0.5 | ) |  | (0.6 | ) |  | (0.7 | ) |
Change in reserve for unrecognized tax benefits | (0.7 | ) |  | (0.2 | ) |  | (0.1 | ) |
Change in valuation allowance | (1.2 | ) |  | (0.1 | ) |  | — |  |
Other | — |  |  | 0.8 |  |  | 1.2 |  |
Total | 26.9 |  | % | 34.6 |  | % | 34.9 |  | %
On December 22, 2017, the U.S. government enacted comprehensive tax legislation (the “Tax Act”), which significantly revises the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35.0% to 21.0%, implementing a territorial tax system, imposing one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs (e.g., interest expense), among other things. Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 118 requires that the Company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. Accordingly, the Company accrued $41.5 million in provisional tax benefit related to the net change in deferred tax liabilities stemming from the Tax Act’s reduction of the U.S. federal tax rate from 35.0% to 21.0% for the year ended December 31, 2017. Additionally, the Company is currently estimating a zero tax liability on foreign unremitted earnings due to a net earnings and profits (“E&P”) deficit on accumulated post-1986 deferred foreign income. Therefore, the Company has not accrued any amount of tax expense for the Tax Act’s one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings going back to 1986 for the year ended December 31, 2017. The Company will continue to analyze historical E&P on accumulated post-1986 deferred foreign income and will record any resulting tax adjustment during 2018. All other accounting as required by the Tax Act as of December 31, 2017 is complete The Tax Act also includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its subsidiaries. The Company may be subject to the GILTI and BEAT provisions effective beginning January 1, 2018 and is in the process of analyzing their effects, including how to account for the GILTI provision from an accounting policy standpoint. The final impact on the Company from the Tax Act’s transition tax legislation may differ from the aforementioned one-time transition tax amount due to the complexity of calculating and supporting with primary evidence such U.S. tax attributes as accumulated foreign earnings and profits, foreign tax paid, and other tax components involved in foreign tax credit calculations for prior years back to 1986. Such differences could be material, due to, among other things, changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the company has utilized to calculate the one-time transition tax. Significant components of the Company’s deferred tax liabilities and assets are as follows:
| December 31, 2017 |  | December 25, 2016
| (In thousands)
Deferred tax liabilities: |  |  |
PP&E and identified intangible assets | $ | 213,500 |  |  | $ | 242,991 |
Inventories | 57,641 |  |  | 93,114 |
Insurance claims and losses | 29,253 |  |  | 42,186 |
Business combinations | 50,695 |  |  | 47,260 |
Other | 18,519 |  |  | 7,938 |
Total deferred tax liabilities | 369,608 |  |  | 433,489 |
Deferred tax assets: |  |  |
Net operating losses | 3,276 |  |  | 3,396 |
Foreign net operating losses | 26,934 |  |  | 32,825 |
Credit carry forwards | 2,425 |  |  | 2,080 |
Allowance for doubtful accounts | 1,767 |  |  | 4,274 |
Accrued liabilities | 50,389 |  |  | 57,567 |
Workers compensation | 26,119 |  |  | 38,834 |
Pension and other postretirement benefits | 13,379 |  |  | 21,903 |
Other | 51,306 |  |  | 46,414 |
Total deferred tax assets | 175,595 |  |  | 207,293 |
Valuation allowance | (14,479 | ) |  | (25,611 | )
Net deferred tax assets | 161,116 |  |  | 181,682 |
Net deferred tax liabilities | $ | 208,492 |  |  | $ | 251,807 |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment. As of December 31, 2017, the Company believes it has sufficient positive evidence to conclude that realization of its federal and state net deferred tax assets is more likely than not to be realized. The decrease in valuation allowance of $11.1 million during 2017 was primarily due to a release of valuation on certain Mexico and U.K. net operating losses. As of December 31, 2017, the Company’s valuation allowance is $14.5 million, of which $13.9 million relates to U.K. and Europe operations, $0.5 million relates to state net operating losses and $0.1 million relates to its Mexico operations. As of December 31, 2017, the Company had state net operating loss carry forwards of approximately $98.0 million that will begin to expire in 2018. The Company also had Mexico net operating loss carry forwards at December 31, 2017 of approximately $19.3 million that begin to expire in 2018. As of December 31, 2017, the Company had approximately $2.1 million of state tax credit carry forwards that begin to expire in 2018. On November 6, 2009, H.R. 3548 was signed into law and included a provision that allowed most business taxpayers an increased carry back period for net operating losses incurred in 2008 or 2009. As a result, during 2009 the Company utilized $547.7 million of its U.S. federal net operating losses under the expanded carry back provisions of H.R. 3548 and filed a claim for refund of $169.7 million. The Company received $122.6 million in refunds from the Internal Revenue Service (“IRS”) from the carry back claims during 2010. The Company anticipates receipt of the remainder of its claim pending resolution of its litigation with the IRS. See “Note 19. Commitments and Contingencies” for additional information. The Company has not provided any deferred income taxes on the undistributed earnings of its foreign subsidiaries as of December 31, 2017 based upon the determination that such earnings will be indefinitely reinvested. It is not practicable to determine the amount of incremental taxes that might arise if these earnings were to be remitted. For the fifty-three weeks ended December 31, 2017 and fifty-two weeks ended December 25, 2016, there is a tax effect of $4.0 million and $3.2 million, respectively, reflected in other comprehensive income. Beginning in 2017, as a result of the new FASB guidance on share-based payments, excess tax benefits are now required to be reported in income tax expense rather than in additional paid-in capital. For the fifty-three weeks ended December 31, 2017, there is a tax effect of $1.1 million reflected in income tax expense due to excess tax benefits related to share-based compensation. For the fifty-two weeks ended December 25, 2016, there is no tax effect reflected in additional paid-in capital due to excess tax benefits related to share-based compensation. See “Note 1. Business and Summary of Significant Accounting Policies” for additional information. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| December 31, 2017 |  | December 25, 2016
| (In thousands)
Unrecognized tax benefits, beginning of year | $ | 16,813 |  |  | $ | 17,110 |
Increase as a result of tax positions taken during the current year | 1,163 |  |  | 1,031 |
Increase as a result of tax positions taken during prior years | 60 |  |  | 16 |
Decrease as a result of tax positions taken during prior years | (892 | ) |  | (140 | )
Decrease for lapse in statute of limitations | (4,123 | ) |  | (1,204 | )
Decrease relating to settlements with taxing authorities | (1,155 | ) |  | — |
Unrecognized tax benefits, end of year | $ | 11,866 |  |  | $ | 16,813 |
Included in unrecognized tax benefits of $11.9 million at December 31, 2017, was $6.7 million of tax benefits that, if recognized, would reduce the Company’s effective tax rate. It is not practicable at this time to estimate the amount of unrecognized tax benefits that will change in the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 31, 2017, the Company had recorded a liability of $7.1 million for interest and penalties. During 2017, accrued interest and penalty amounts related to uncertain tax positions decreased by $1.1 million. The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico and the United Kingdom. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations for years prior to 2011 and is no longer subject to Mexico and U.K. income tax examinations by taxing authorities for years prior to 2011. The Company has a tax sharing agreement with JBS USA Food Company Holdings effective for tax years beginning 2010. The net tax receivable for tax year 2017 of $5.6 million was accrued in 2017 as a capital contribution and an account receivable from a related party in our Consolidated and Combined Balance Sheet.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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