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Note 10 - Income Taxes | 12 Months Ended
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Dec. 30, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 10. Income Taxes On December 22, 2017, the U.S. enacted legislation commonly referred to as t he Tax Cuts and Jobs Act (the "Tax Act"). Among other things, the Tax Act reduces the U.S. corporate federal income tax rate from 35% to 21%, adds base broadening provisions which limit deductions and address excessive international tax planning, imposes a one -time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and enables repatriation of earnings of non-U.S. subsidiaries free of U.S. federal income tax. Other than the Toll Charge (which is applicable to the Company for 2017 ), the provisions will generally be applicable to the Company in 2018 and beyond. In accordance with the guidance provided in SEC Staff Accounting Bulletin (“SAB”) No. 118, in the fourth quarter of 2017 the Company recorded a charge of $47 million as a provisional reasonable estimate of the impact of the Tax Act, including $49 million for the Toll Charge net of $2 million for other net tax benefits. The Company is continuing to analyze the Tax Act and plans to finalize the estimate within the measurement period outlined in SAB No. 118. The final charge may differ from the provisional reasonable estimate if provisions of the Tax Act, and their interaction with other provisions of the U.S. Internal Revenue Code, are interpreted differently than interpretations made by the Company in determining the estimate, whether through issuance of administrative guidance, or through further review of the Tax Act by the Company and its advisors. Aside from these interpretation issues, the final charge may differ from the provisional reasonable estimate due to refinements of accumulated non-U.S. earnings and tax pool data. One of the base broadening provisions of the Tax Act is commonly referred to as the “GILTI” provisions. In accordance with guidance issued by the FASB staff, the Company has not adopted an accounting policy for GILTI. Thus, the U.S. balance sheet tax accounts, notably deferred taxes, were computed without consideration of the possible future impact of the GILTI provisions. The Company intends to adopt an accounting policy for GILTI within the measurement period outlined in SAB 118. Domestic and foreign income (loss) before income taxes is as follows:
(in thousands ) |  | 201 7 |  |  | 201 6 |  |  | 201 5 |
Domestic |  | $ | (20,496 | ) |  | $ | (9,563 | ) |  | $ | 1,313 |
Foreign |  |  | 224,533 |  |  |  | 132,837 |  |  |  | 105,635 |
Income before income taxes |  | $ | 204,037 |  |  | $ | 123,274 |  |  | $ | 106,948 |
Federal, state and foreign income tax expense (benefit) consists of the following:
(in thousands ) |  | 201 7 |  |  | 201 6 |  |  | 201 5 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 34,060 |  |  | $ | (3,992 | ) |  | $ | (6,686 | )
State |  |  | 450 |  |  |  | (648 | ) |  |  | 2,078 |
Foreign |  |  | 32,945 |  |  |  | 28,695 |  |  |  | 19,211 |
Subtotal |  |  | 67,455 |  |  |  | 24,055 |  |  |  | 14,603 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal and State |  |  | 16,562 |  |  |  | (1,594 | ) |  |  | 11,330 |
Foreign |  |  | 501 |  |  |  | (3,675 | ) |  |  | 149 |
Subtotal |  |  | 17,063 |  |  |  | (5,269 | ) |  |  | 11,479 |
Provision for income taxes |  | $ | 84,518 |  |  | $ | 18,786 |  |  | $ | 26,082 |
The current federal and state income tax expense for 2017 includes the preliminary estimate of $49 million for the Toll Charge as discussed above, partially offset by $13 million of foreign tax credits. The Company will elect to pay the 2017 current federal income tax over the eight -year period prescribed by the Tax Act. The long-term portion of the 2017 current federal income tax (approximately $32 million) is recorded in the O ther long-term liabilit ies on the Consolidated Balance Sheets as of December 30, 2017. The current federal tax benefit for 2016 includes an estimated $3 million benefit as a result of the carry-back of the 2016 U.S. federal net operating loss to the 2014 tax year. The current federal tax benefit for 2015 includes an $11.7 million benefit reclassified from accumulated other comprehensive income as a result of the company ’s termination of the U.S. defined benefit pension plan as described in Note 8, Benefit Plans . A reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below:
(in thousands ) |  | 201 7 |  |  | 201 6 |  |  | 201 5 |
Tax expense at statutory rate of 35% |  | $ | 71,413 |  |  | $ | 43,146 |  |  | $ | 37,432 |
Provisional amount of the Toll charge |  |  | 49,000 |  |  |  | — |  |  |  | — |
Provisional Tax Act impact other than the Toll charge |  |  | (1,962 | ) |  |  | — |  |  |  | — |
State and local taxes, net of federal tax benefit |  |  | 292 |  |  |  | (415 | ) |  |  | 1,907 |
Non-U.S. income tax rate differential |  |  | (47,077 | ) |  |  | (25,471 | ) |  |  | (18,253 | )
Impairment of goodwill without tax benefit |  |  | — |  |  |  | 3,088 |  |  |  | — |
Tax on unremitted earnings |  |  | 12,202 |  |  |  | 2,747 |  |  |  | — |
Mexico manufacturing operations restructuring |  |  | — |  |  |  | — |  |  |  | 4,841 |
Nondeductible professional fees |  |  | 1,240 |  |  |  | 313 |  |  |  | 1,011 |
Tax deduction for stock of foreign subsidiary |  |  | — |  |  |  | (3,896 | ) |  |  | — |
Other, net |  |  | (590 | ) |  |  | (726 | ) |  |  | (856 | )
Provision for income taxes |  | $ | 84,518 |  |  | $ | 18,786 |  |  | $ | 26,082 |
Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the company ’s assets and liabilities. Significant components of the company’s deferred tax assets and liabilities at December 30, 2017 and December 31, 2016, are as follows:
(in thousands) |  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 24,094 |  |  | $ | 31,770 |
Foreign tax credit carryforwards |  |  | 1,053 |  |  |  | 6,472 |
Accrued restructuring |  |  | 156 |  |  |  | 456 |
Capital losses |  |  | 3,165 |  |  |  | 4,557 |
Domestic and foreign net operating loss carryforwards |  |  | 5,778 |  |  |  | 2,223 |
Gross deferred tax assets |  |  | 34,246 |  |  |  | 45,478 |
Less: Valuation allowance |  |  | (6,203 | ) |  |  | (6,738 | )
Total deferred tax assets |  |  | 28,043 |  |  |  | 38,740 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Tax depreciation and amortization in excess of book |  |  | 21,254 |  |  |  | 23,471 |
T ax on unremitted earnings |  |  | 12,000 |  |  |  | 1,750 |
Total deferred tax liabilities |  |  | 33,254 |  |  |  | 25,221 |
Net deferred tax (liabilities) assets |  | $ | (5,211 | ) |  | $ | 13,519 |
The deferred tax asset valuation allowance is related to a U.S. capital loss carryover (which expire in 2018 ) and tax attributes of certain non-US subsidiaries which are not expected to be realized. The remaining net operating losses either have no expira tion date or are expected to be utilized prior to expiration (which begin expiring in 2021 ). The Company paid income taxes of $31.8 million, $35.6 million, and $23.3 million in 2017, 2016, and 2015, respectively, and received income tax refunds of $13.7 million in 2017. Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those operations. As of December 30, 2017, unremitted earnings of the Company ’s non-U.S. subsidiaries was approximately $680 million. The Company recognized deferred tax liabilities of $12.0 million ( $11.8 million for non-U.S. taxes and $0.2 million for U.S. state taxes) as of December 30, 2017 and $1.8 million as of December 31, 2016, related to taxes on certain non-U.S. earnings which are not considered to be permanently reinvested. Some of these taxes may provide a U.S. federal income tax benefit as a foreign tax credit. However, due to uncertainty in regard to the Tax Act’s provisions, no such tax benefit was recorded. The Company will reconsider this provisional conclusion when it finalizes its preliminary reasonable estimate of the impact of the Tax Act, based upon interpretations and administrative guidance as of that time. The Company has three subsidiaries in China which benefit from lowered income tax rates due to “tax holidays” which apply for three -year periods, subject to extension. One such tax holiday expires in 2018, and the Company expects to be granted an extension. Such tax holidays contributed $5.7 million in tax benefits, or $0.25 per diluted share, during 2017, with similar amounts expected in future years while such tax holidays are in effect. A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 30, 2017, December 31, 2016, and January 2, 2016 is as follows:
(in thousands, except per share amounts ) |  | Unrecognized Tax Benefits |
Balance at January 2, 2016 |  | $ | 3,532 |
Additions for tax positions taken in the current year |  |  | 2,696 |
Additions for tax positions taken in the pre-acquisition periods of acquired subsidiaries |  |  | 2,491 |
Settlements |  |  | (102 | )
Balance at December 31, 2016 |  | $ | 8,617 |
Additions for tax positions taken in the current year |  |  | 370 |
Other |  |  | (1,327 | )
Balance at December 30, 2017 |  | $ | 7,660 |
The company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense. The company recognized interest expense of $0.9 million, $0.9 million, and $0.2 million in 2017, 2016, and 2015, respectively. Accrued interest was $3.3 million, $2.4 million, and $1.5 million as of December 30, 2017, December 31, 2016, and January 2, 2016, respectively. The amount of unrecognized tax benefits at December 30, 2017 was $ 7.7 million. This total represents the net amount of tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The company does not expect any material decrease in unrecognized tax benefits in the next 12 months. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The U.S. federal statute of limitations remains open for 201 4 onward although the company has been audited for 2014 (during 2016 ) and the audit concluded with no additional tax due. In late 2017, the U.S. Internal Revenue Service began an examination of the Company’s federal income tax returns for 2015 and 2016 (with certain aspects of 2014 also subject to review as a consequence of a carryback of tax attributes from 2016 ). Foreign and U.S. state statute of limitations generally range from three to seven years. The German tax authority is currently conducting its examination for tax years 2011 through 2014. Other non-U.S. tax examinations occur from time to time, including one which is currently in process in Italy. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding any of these examinations.

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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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