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INCOME TAXES | 12 Months Ended
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Dec. 29, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | (10) INCOME TAXES Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries are as follows:
| 2018 |  | 2017 |  | 2016
United States | $ | 127,852 |  |  | $ | 152,372 |  |  | $ | 136,682 |
Foreign | 15,589 |  |  | 76,092 |  |  | 83,772 |
| $ | 143,441 |  |  | $ | 228,464 |  |  | $ | 220,454 |
In fiscal 2017, the Company estimated and recognized approximately $41,935 of tax expense for the 2017 Tax Act. The SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the 2017 Tax Act. The Company's accounting for the following element of the 2017 Tax Act was finalized as of December 30, 2017: Reduction of U.S. federal corporate tax rate: The 2017 Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a decrease related to deferred taxes of $20,372, with a corresponding net adjustment to deferred income tax expense for the year ended December 30, 2017. (10) INCOME TAXES (Continued) The Company's accounting for the following elements of the 2017 Tax Act were provisional estimates at December 30, 2017, and were finalized as of December 29, 2018 as follows: Deemed Repatriation transition tax: The Deemed Repatriation transition tax (“Transition Tax”) is a tax on unremitted foreign earnings of certain foreign subsidiaries, which subjected the Company's unremitted foreign earnings of approximately $394,000 to tax at certain specified rates less associated foreign tax credits. The Company recorded a Transition Tax obligation of $9,890 during fiscal 2017 and reduced this expense by $550 in 2018 upon finalization. Indefinite reinvestment assertion: The Company position remains that unremitted foreign earnings subject to the Transition Tax are not indefinitely reinvested. The Company recorded foreign withholding taxes and U.S. state income taxes of $10,373 and $1,300. This expense was recorded in 2017 with a decrease of only $140 recognized in 2018 as it was finalized. In addition, the Company has taken the position that on non-U.S. subsidiaries, the 2018 unremitted foreign earnings are not indefinitely reinvested and it recorded additional foreign withholding taxes and U.S. state income taxes of $918 and $99, respectively during 2018. Income tax expense (benefit) consists of:
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal | $ | 21,106 |  |  | $ | 49,324 |  |  | $ | 41,539 |
State | 6,585 |  |  | 4,415 |  |  | 5,467 |
Foreign | 17,559 |  |  | 12,880 |  |  | 19,123 |
| 45,250 |  |  | 66,619 |  |  | 66,129 |
Non-current: | (456 | ) |  | (229 | ) |  | (381 | )
Deferred: |  |  |  |  |
Federal | 213 |  |  | (9,626 | ) |  | 8,504 |
State | 9 |  |  | (385 | ) |  | 202 |
Foreign | (1,881 | ) |  | 49,766 |  |  | (32,391 | )
| (1,659 | ) |  | 39,755 |  |  | (23,685 | )
| $ | 43,135 |  |  | $ | 106,145 |  |  | $ | 42,063 |
(10) INCOME TAXES (Continued) The reconciliations of the statutory federal income tax rate and the effective tax rate follows:
| 2018 |  | 2017 |  | 2016
Statutory federal income tax rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal benefit | 3.5 |  |  | 1.4 |  |  | 1.7 |
Carryforwards, credits and changes in valuation allowances | 3.2 |  |  | (1.4 | ) |  | 2.9 |
Foreign tax rate differences | (1.0 | ) |  | (4.1 | ) |  | (4.8 | )
Changes in unrecognized tax benefits | (0.3 | ) |  | (0.1 | ) |  | (0.2 | )
Domestic production activities deduction | — |  |  | (2.1 | ) |  | (2.0 | )
Goodwill impairment | 2.2 |  |  | — |  |  | — |
UK tax rate reduction | — |  |  | — |  |  | 1.0 |
Reversal of contingent liability | — |  |  | — |  |  | (2.2 | )
UK defined benefit pension plan | — |  |  | — |  |  | (14.6 | )
Effects of 2017 Tax Act | (0.5 | ) |  | 18.4 |  |  | — |
Other | 2.0 |  |  | (0.6 | ) |  | 2.3 |
| 30.1 | % |  | 46.5 | % |  | 19.1 | %
Fiscal 2018 includes $3,171 of tax expense related to non tax deductible goodwill and $6,756 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance. Fiscal 2017 includes $41,935 of tax expense related to the 2017 Tax Act. Fiscal 2016 includes $32,450 of deferred income tax benefit attributable to the re-measurement of the deferred tax asset related to the Company's U.K. defined benefit pension plan. This item arose from a 2016 international legal reorganization executed to better reflect the Company's operational business strategies. The Company considered many factors in effecting this realignment, including streamlining treasury functions, creating a platform for future growth, and capital allocation considerations. In addition, in fiscal 2016 the Company recorded a $9,888 valuation allowance against a tax credit which is not more likely than not to be realized. The reversal of a $16,591 contingent non-current liability in 2016 was not taxable. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company’s net deferred income tax liabilities are as follows: (10) INCOME TAXES (Continued)
| 2018 |  | 2017
Deferred income tax assets: |  |  |
Accrued expenses and allowances | $ | 4,354 |  |  | $ | 13,373 |
Accrued insurance | 644 |  |  | 818 |
Tax credits and loss carryforwards | 56,867 |  |  | 54,521 |
Defined benefit pension liability | 36,328 |  |  | 47,459 |
Inventory allowances | 4,384 |  |  | 3,433 |
Accrued warranty | 3,914 |  |  | 4,602 |
Deferred compensation | 28,706 |  |  | 29,421 |
Gross deferred income tax assets | 135,197 |  |  | 153,627 |
Valuation allowance | (33,228 | ) |  | (27,864 | )
Net deferred income tax assets | 101,969 |  |  | 125,763 |
Deferred income tax liabilities: |  |  |
Work in progress | 1,064 |  |  | 1,805 |
Property, plant and equipment | 25,477 |  |  | 26,826 |
Intangible assets | 44,850 |  |  | 39,613 |
Future repatriation of foreign earnings | 2,746 |  |  | 11,673 |
Other liabilities | 4,545 |  |  | 1,819 |
Total deferred income tax liabilities | 78,682 |  |  | 81,736 |
Net deferred income tax asset | $ | 23,287 |  |  | $ | 44,027 |
Deferred income tax assets (liabilities) are presented as follows on the Consolidated Balance Sheets:
Balance Sheet Caption | 2018 |  | 2017
Other assets | $ | 66,776 |  |  | $ | 78,933 |
Deferred income taxes | (43,489 | ) |  | (34,906 | )
Net deferred income tax asset | $ | 23,287 |  |  | $ | 44,027 |
Management of the Company has reviewed recent operating results and projected future operating results. The Company's belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent years and available tax planning strategies. At December 29, 2018 and December 30, 2017 respectively, there were $56,867 and $54,521 relating to tax credits and loss carryforwards. During 2017, several dormant UK legal entities were placed in liquidation resulting in a reduction of the capital loss carryforward of $60,691. This reduction was fully offset by a reduction in the related valuation allowance. Valuation allowances have been established for certain losses that reduce deferred tax assets to an amount that will, more likely than not, be realized. The deferred tax assets at December 29, 2018 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting 2021. Uncertain tax positions included in other non-current liabilities are evaluated in a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority. (10) INCOME TAXES (Continued) The following summarizes the activity related to our unrecognized tax benefits in 2018 and 2017, in thousands:
| 2018 |  | 2017
Gross unrecognized tax benefits—beginning of year | $ | 3,196 |  |  | $ | 3,400 |
Gross increases—tax positions in prior period | 103 |  |  | 5 |
Gross decreases—tax positions in prior period | (199 | ) |  | — |
Gross increases—current‑period tax positions | 280 |  |  | 1,044 |
Settlements with taxing authorities | (50 | ) |  | (65 | )
Lapse of statute of limitations | (731 | ) |  | (1,188 | )
Gross unrecognized tax benefits—end of year | $ | 2,599 |  |  | $ | 3,196 |
There are approximately $766 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statute of limitations. The nature of these uncertain tax positions is generally the computation of a tax deduction or tax credit. During 2018, the Company recorded a reduction of its gross unrecognized tax benefit of $731 with $577 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States. During 2017, the Company recorded a reduction of its gross unrecognized tax benefit of $1,188, with $772 recorded as a reduction of its income tax expense, due to the expiration of statutes of limitation in the United States. In addition to these amounts, there was an aggregate of $196 and $187 of interest and penalties at December 29, 2018 and December 30, 2017, respectively. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Earnings. The Company files income tax returns in the U.S. and various states as well as foreign jurisdictions. Tax years 2015 and forward remain open under U.S. statutes of limitation. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $2,536 and $3,059 at December 29, 2018 and December 30, 2017, respectively.

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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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