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Income Taxes | 12 Months Ended
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Dec. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Earnings before taxes is summarized as follows (in thousands):
| 2017 |  | 2016 |  | 2015
Domestic | $ | 290,866 |  |  | $ | 336,625 |  |  | $ | 266,831 |
Foreign | 92,663 |  |  | 84,680 |  |  | 14,336 |
Total | $ | 383,529 |  |  | $ | 421,305 |  |  | $ | 281,167 |
The provision for income taxes is summarized as follows (in thousands):
| 2017 |  | 2016 |  | 2015
Federal | $ | 48,688 |  |  | $ | 94,621 |  |  | $ | 78,617 |
State and local | 9,076 |  |  | 13,107 |  |  | 9,515 |
Foreign | 27,637 |  |  | 29,361 |  |  | 1,425 |
Total | $ | 85,401 |  |  | $ | 137,089 |  |  | $ | 89,557 |
Current | $ | 99,893 |  |  | $ | 115,726 |  |  | $ | 87,638 |
Deferred | (14,492 | ) |  | 21,363 |  |  | 1,919 |
Total | $ | 85,401 |  |  | $ | 137,089 |  |  | $ | 89,557 |
Reconciliation of the differences between income taxes computed at the federal statutory rate to the effective rate are as follows:
| 2017 |  | 2016 |  | 2015
U.S. federal statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State taxes, net of federal benefit | 1.5 |  |  | 2.3 |  |  | 2.1 |
U.S. domestic manufacturers deduction | (2.1 | ) |  | (2.4 | ) |  | (2.6 | )
Permanent differences | (0.7 | ) |  | (1.6 | ) |  | (1.1 | )
Foreign income tax rate at rates other than 35% | (1.6 | ) |  | (1.1 | ) |  | (2.1 | )
Tax Cuts and Jobs Act of 2017 deferred tax changes | (10.0 | ) |  | — |  |  | — |
Tax Cuts and Jobs Act of 2017 transition tax | 2.0 |  |  | — |  |  | — |
Change in valuation allowances | (2.0 | ) |  | — |  |  | — |
Tax on unremitted earnings | 1.5 |  |  | — |  |  | — |
Other | (1.3 | ) |  | 0.3 |  |  | 0.6 |
Consolidated effective tax | 22.3 | % |  | 32.5 | % |  | 31.9 | %
The company’s effective tax rate for 2017 was 22.3% as compared to 32.5% in 2016. The effective tax rate for 2017 reflects the impact of complying with the Tax Cuts and Job Act of 2017 (the Tax Act or tax reform), signed into law on December 22, 2017 and the adoption of ASU 2016-09 "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" on January 1, 2017. The tax impact of these items in addition to the reversal of a valuation allowance are the primary causes of the 2017 tax rate being lower than the federal statutory tax rate of 35.0% and lower than the effective tax rate for 2016. The company is still evaluating the impact of the Tax Act and how it will affect the company’s capital structure and permanent reinvestment assertions for its foreign subsidiaries as the United States international taxation moves from a worldwide tax system to a territorial tax system. Prior to the Tax Act the company largely asserted its foreign earnings where permanently reinvested, while there were several entities whose earnings were only partially reinvested. As result of the Tax Act and the transition tax the foreign earnings are being currently taxed, resulting in a net transition tax liability of approximately $7.5 million. The company has accordingly modified its partial reinvestment assertions for several foreign subsidiaries to provide funds to help cover the transition tax liability. This is reflected as an increase in tax on unremitted earnings in the effective tax rate reconciliation and increase in other deferred tax liabilities as shown in the components of deferred taxes. The company’s impact of tax reform is based on current information and guidance available at this time and reflects our best provisional estimates in accordance with Staff Accounting Bulletin No. 118. The provisional estimates will be subject to refinement in 2018. At December 30, 2017 and December 31, 2016, the company had recorded the following deferred tax assets and liabilities:
| 2017 |  | 2016
| (dollars in thousands)
Deferred tax assets: |  |  |  |  |
Compensation related | 3,129 |  |  | 25,650 |
Pension and post-retirement benefits | 56,502 |  |  | 60,986 |
Inventory reserves | 11,342 |  |  | 14,379 |
Accrued liabilities and reserves | 9,813 |  |  | 4,550 |
Warranty reserves | 7,232 |  |  | 10,141 |
Net operating loss carryforwards | 37,911 |  |  | 35,591 |
Other | 19,826 |  |  | 41,198 |
Gross deferred tax assets | 145,755 |  |  | 192,495 |
Valuation allowance | (23,190 | ) |  | (29,893 | )
Deferred tax assets | $ | 122,565 |  |  | $ | 162,602 |
Deferred tax liabilities: |  |  |  |  |
Intangible assets | $ | (137,871 | ) |  | $ | (173,673 | )
Depreciable assets | (10,426 | ) |  | (2,957 | )
Other | (17,518 | ) |  | (12,033 | )
Deferred tax liabilities | $ | (165,815 | ) |  | $ | (188,663 | )
Net deferred tax assets (liabilities) | $ | (43,250 | ) |  | $ | (26,061 | )
Long-term deferred asset | 44,565 |  |  | 51,699 |
Long-term deferred liability | (87,815 | ) |  | (77,760 | )
Net deferred tax assets (liabilities) | $ | (43,250 | ) |  | $ | (26,061 | )
The company recorded a transition tax on undistributed foreign earnings as required by the Tax Act. Additional the company provided $3.9 million on undistributed earnings not permanently reinvested. No further provisions were made for income taxes that may result from future remittances of undistributed earnings of foreign subsidiaries that are determined to be permanently reinvested, which were $197.0 million on December 30, 2017. Determination of the total amount of unrecognized deferred income taxes on undistributed earnings net of foreign subsidiaries is not practicable. The company has a deferred tax asset on net operating loss carryforwards totaling $37.9 million as of December 30, 2017. These net operating losses are available to reduce future taxable earnings of certain domestic and foreign subsidiaries. United States federal loss carryforwards total $37.9 million and expire through 2037, state loss carryforwards total $124.2 million and expire through 2037 and international loss carryforwards total $86.1 million and expire through 2030; however, some have no expiration date. Of these carryforwards, $80.4 million is subject to full valuation allowance. As of December 30, 2017, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $29.9 million (of which $29.5 million would impact the effective tax rate if recognized) plus approximately $4.5 million of accrued interest and $7.5 million of penalties. The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Interest recognized in fiscal years 2017, 2016 and 2015 was $0.7 million, $0.3 million and $0.3 million, respectively. Penalties recognized in fiscal years 2017, 2016 and 2015 was $1.3 million, $1.0 million and $0.8 million, respectively. Although the company believes its tax returns are correct, the final determination of tax examinations may be different than what was reported on the tax returns. In the opinion of management, adequate tax provisions have been made for the years subject to examination. The following table summarizes the activity related to the unrecognized tax benefits for the fiscal years ended January 2, 2016, December 31, 2016 and December 30, 2017 (in thousands):
Balance at January 2, 2016 | $ | 14,419 |
Increases to current year tax positions | 6,367 |
Increase to prior year tax positions | 601 |
Decrease to prior year tax positions | (233 | )
Settlements | — |
Lapse of statute of limitations | (865 | )
Balance at December 31, 2016 | $ | 20,289 |
Increases to current year tax positions | 11,843 |
Increase to prior year tax positions | 201 |
Decrease to prior year tax positions | (9 | )
Settlements | (439 | )
Lapse of statute of limitations | (1,955 | )
Balance at December 30, 2017 | $ | 29,930 |
It is reasonably possible that the amounts of unrecognized tax benefits associated with state, federal and foreign tax positions may decrease over the next twelve months due to expiration of a statute or completion of an audit. The company believes that it is reasonably possible that $4.3 million of its remaining unrecognized tax benefits may be recognized by the end of 2018 as a result of settlements with taxing authorities or lapses of statutes of limitations. In the normal course of business, income tax authorities in various income tax jurisdictions both in the United States and internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to determine if individual income tax authorities are in agreement with our interpretations of complex tax regulations regarding the allocation of income to the various income tax jurisdictions. Income tax years are open from 2014 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2013 through the current year.

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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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