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Income Taxes | 12 Months Ended
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Jan. 01, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the global intangible low-taxed income provisions ("GILTI"). T he Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-term portion of this Toll Charge which remains payable as of January 1, 2022, totaling $17.8 million, is recorded in Other long-term liabilities, and the anticipated 2022 annual installment payment of $3.0 million is included in Accrued income taxes, on the Consolidated Balance Sheet as of January 1, 2022. In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the fiscal years ended January 1, 2022, December 26, 2020 and December 28, 2019, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense. Domestic and foreign income (loss) before income taxes is as follows:
(in thousands) | 2021 |  | 2020 |  | 2019
Domestic | $ | 13,746 |  |  | $ | (16,732) |  |  | $ | (11,970) |
Foreign | 327,279 |  |  | 177,985 |  |  | 177,854 |
Income before income taxes | $ | 341,025 |  |  | $ | 161,253 |  |  | $ | 165,884 |
Federal, state and foreign income tax expense (benefit) consists of the following:
(in thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 4,832 |  |  | $ | 437 |  |  | $ | (3,495) |
State | 1,401 |  |  | 203 |  |  | 834 |
Foreign | 59,006 |  |  | 33,841 |  |  | 30,610 |
Subtotal | 65,239 |  |  | 34,481 |  |  | 27,949 |
Deferred: |  |  |  |  |
Federal and State | (9,658) |  |  | (5,354) |  |  | 1,839 |
Foreign | 1,638 |  |  | 2,140 |  |  | (2,986) |
Subtotal | (8,020) |  |  | (3,214) |  |  | (1,147) |
Provision for income taxes | $ | 57,219 |  |  | $ | 31,267 |  |  | $ | 26,802 |
The current federal tax benefit for 2019 includes a benefit of $3.3 million from the recognition of previously unrecognized tax benefits (and the reversal of the related accrued interest) due to a lapse in the statute of limitations. 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) | 2021 |  | 2020 |  | 2019
Tax expense at statutory rate of 21% | $ | 71,615 |  |  | $ | 33,863 |  |  | $ | 34,836 |
Non-U.S. income tax rate differential | (31,414) |  |  | (19,730) |  |  | (22,457) |
Non-U.S. losses and expenses with no tax benefit | 7,820 |  |  | 2,774 |  |  | 6,570 |
Tax on unremitted earnings | 7,585 |  |  | 3,955 |  |  | 2,136 |
Certain changes in unrecognized tax benefits and related accrued interest | 4,263 |  |  | 2,160 |  |  | (1,468) |
Net impact associated with the GILTI tax provisions | (238) |  |  | 3,731 |  |  | 6,469 |
State and local taxes, net of federal tax benefit | (172) |  |  | (584) |  |  | 1,080 |
Tax impact of non-deductible goodwill impairment charge | — |  |  | 5,642 |  |  | — |
Other, net | (2,240) |  |  | (544) |  |  | (364) |
Provision for income taxes | $ | 57,219 |  |  | $ | 31,267 |  |  | $ | 26,802 |
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 January 1, 2022 and December 26, 2020, are as follows:
(in thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Accrued expenses and reserves | $ | 36,168 |  |  | $ | 31,123 |
Domestic and non-U.S. net operating loss carryforwards | 27,818 |  |  | 24,763 |
Domestic and non-U.S. interest expense carryforwards | 16,089 |  |  | 10,352 |
Excess of tax basis over the book basis for intangible assets and goodwill | 5,636 |  |  | — |
Capitalized expenses | 4,878 |  |  | 4,178 |
U.S. research and other general business tax credit carryforwards | 1,104 |  |  | 3,724 |
U.S. foreign tax credit carryforwards | 980 |  |  | 772 |
Other | 183 |  |  | 117 |
Gross deferred tax assets | 92,856 |  |  | 75,029 |
Less: Valuation allowance | (34,869) |  |  | (13,131) |
Total deferred tax assets | 57,987 |  |  | 61,898 |
Deferred tax liabilities: |  |  |
Excess of book basis over the tax basis for intangible assets and goodwill | 98,046 |  |  | 76,472 |
Tax on unremitted earnings | 15,467 |  |  | 14,223 |
Unrealized foreign currency exchange gains | 73 |  |  | 5,719 |
Excess of book basis over the tax basis for property, plant, and equipment | 12,563 |  |  | 4,394 |
Total deferred tax liabilities | 126,149 |  |  | 100,808 |
Net deferred tax liabilities | $ | 68,162 |  |  | $ | 38,910 |
The deferred tax asset valuation allowance is mainly related to certain U.S. and non-U.S. net operating loss and non-U.S. interest expense carryforwards which are not expected to be realized. The remaining U.S. and non-U.S. net operating loss and interest expense carryforwards either have no expiration date or are expected to be utilized prior to expiration. No deferred tax asset nor valuation allowance has been recorded for certain U.S. and non-U.S. net operating loss carryforwards for which the possibility of usage has been determined to be remote. The Company paid income taxes of $58.2 million, $35.2 million, and $47.6 million in 2021, 2020, and 2019, respectively, and received income tax refunds of $2.6 million, $7.6 million, and $7.1 million in 2021, 2020, and 2019, respectively. 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. The Company believes the determination of the amount of such deferred income taxes is impractical as it would depend upon income tax laws and circumstances at the time of the hypothetical distributions or dispositions. As of January 1, 2022, unremitted earnings of the Company’s non-U.S. subsidiaries were approximately $884 million. A distribution of such earnings will generally not be subject to U.S. federal income tax. The Company recognized deferred tax liabilities of $15.5 million ($15.3 million for non-U.S. taxes net of related U.S. foreign tax credits, and $0.2 million for U.S. state taxes) as of January 1, 2022 and $14.2 million ($13.9 million for non-U.S. taxes net of related U.S. foreign tax credits, and $0.3 million for U.S. state taxes) as of December 26, 2020, related to taxes on certain non-U.S. earnings which are not considered to be permanently reinvested. The Company has two subsidiaries in China which benefit from lower tax rates due to “tax holidays” which apply for three-year periods. The tax holiday for one of the subsidiaries expires at the end of 2022, and for the other subsidiary the tax holiday will expire at the end of 2023. Together, the tax holidays contributed $7.8 million in tax benefits, or $0.31 per diluted share, during 2021. Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire. There can be no assurance that future extensions will be granted. A reconciliation of the beginning and ending amount of unrecognized tax benefits as of January 1, 2022, December 26, 2020, and December 28, 2019 is as follows:
(in thousands) | Unrecognized Tax Benefits
Balance at December 28, 2019 | $ | 16,721 |
Additions for tax positions taken in the current year | 700 |
Decreases due to a lapse in the statute of limitations | (103) |
Other | 119 |
Balance at December 26, 2020 | 17,437 |
Additions for tax positions related to pre-acquisition periods of acquired subsidiaries | 3,260 |
Additions for tax positions taken in the current year | 1,587 |
Additions for tax positions taken in the prior year | 1,100 |
Other | 61 |
Balance at January 1, 2022 | 23,445 |
The January 1, 2022 total in the table above represents the net amount of tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. Of this amount, only an insignificant amount may be recognized in 2022 based upon the possible lapse in the statute of limitations. 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 company recognizes accrued interest and pe nalties associated with uncertain tax positions as part of income tax expense. The company recognized such interest expense of $1.6 million, $1.6 million (net of a $0.6 million decrease due to a lapse in the statute of limitations), and $1.3 million (net of a $0.6 million decrease due to a lapse in the statute of limitations) in 2021, 2020, and 2019, respectively. Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $10.4 million and $8.8 million as of January 1, 2022 and December 26, 2020, respec tively. The U.S. federal statute of limitations remains open for the Company for the 2017 tax year (with respect to the Toll Charge) and later years. Non-U.S. and U.S. state statutes of limitations generally range from three to seven years, although certain jurisdictions do not have a statute expiration. Tax examinations occur from time to time, including examinations currently in process in Korea, the Netherlands, the Philippines, and certain U.S. states. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding these examinations. During 2021, the Company received a notice of assessment for approximately $3 million from the Canadian tax authorities. The Company has objected to and appealed the assessment, and does not expect to recognize a significant amount of additional tax expense upon conclusion of such appeal.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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