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Income Taxes | 12 Months Ended
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Dec. 30, 2023
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 December 30, 2023, totaling $8.2 million, is recorded in Other long-term liabilities, and the anticipated 2024 annual installment payment of $6.6 million is included in Accrued income taxes, on the Consolidated Balance Sheet as of December 30, 2023. 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 December 30, 2023, December 31, 2022, and January 1, 2022, 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) | 2023 |  | 2022 |  | 2021
Domestic | $ | 40,571 |  |  | $ | 32,462 |  |  | $ | 13,746 |
Foreign | 288,027 |  |  | 410,582 |  |  | 327,279 |
Income before income taxes | $ | 328,598 |  |  | $ | 443,044 |  |  | $ | 341,025 |
Federal, state and foreign income tax expense (benefit) consists of the following:
(in thousands) | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 8,188 |  |  | $ | 12,423 |  |  | $ | 4,832 |
State | 2,880 |  |  | 2,183 |  |  | 1,401 |
Foreign | 57,999 |  |  | 77,551 |  |  | 59,006 |
Subtotal | 69,067 |  |  | 92,157 |  |  | 65,239 |
Deferred: |  |  |  |  |
Federal and State | 1,751 |  |  | (9,182) |  |  | (9,658) |
Foreign | (1,705) |  |  | (13,237) |  |  | 1,638 |
Subtotal | 46 |  |  | (22,419) |  |  | (8,020) |
Provision for income taxes | $ | 69,113 |  |  | $ | 69,738 |  |  | $ | 57,219 |
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) | 2023 |  | 2022 |  | 2021
Tax expense at statutory rate of 21% | $ | 69,006 |  |  | $ | 93,039 |  |  | $ | 71,615 |
Non-U.S. income tax rate differential | (25,623) |  |  | (41,731) |  |  | (31,414) |
Non-U.S. losses and expenses with no tax benefit | 11,261 |  |  | 10,660 |  |  | 7,820 |
Tax on unremitted earnings | 6,394 |  |  | 10,870 |  |  | 7,585 |
Net impact associated with U.S. tax on Non-U.S. income, including GILTI | 4,739 |  |  | 2,546 |  |  | (238) |
State and local taxes, net of federal tax benefit | 1,503 |  |  | 215 |  |  | (172) |
Certain changes in unrecognized tax benefits and related accrued interest | (172) |  |  | 1,839 |  |  | 4,263 |
One-time tax deductions for stock of subsidiaries | — |  |  | (11,495) |  |  | — |
Other, net | 2,005 |  |  | 3,795 |  |  | (2,240) |
Provision for income taxes | $ | 69,113 |  |  | $ | 69,738 |  |  | $ | 57,219 |
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, 2023 and December 31, 2022, are as follows:
(in thousands) | 2023 |  | 2022
Deferred tax assets: |  |  |
Accrued expenses and reserves | $ | 39,299 |  |  | $ | 49,138 |
Net operating loss carryforwards | 36,941 |  |  | 30,403 |
Interest expense carryforwards | 34,205 |  |  | 33,507 |
Capitalized expenses | 16,872 |  |  | 11,632 |
U.S. foreign tax credit carryforwards | 3,561 |  |  | 3,385 |
U.S. research and other general business tax credit carryforwards | 1,468 |  |  | 2,076 |
Excess of tax basis over the book basis for intangible assets and goodwill | — |  |  | 404 |
Deferred tax assets | 132,346 |  |  | 130,545 |
Less: Valuation allowance | (41,542) |  |  | (37,001) |
Total deferred tax assets | 90,804 |  |  | 93,544 |
Deferred tax liabilities: |  |  |
Excess of book basis over the tax basis for intangible assets and goodwill | 148,659 |  |  | 143,542 |
Excess of book basis over the tax basis for property, plant, and equipment | 22,570 |  |  | 18,489 |
Tax on unremitted earnings | 18,621 |  |  | 16,282 |
Unrealized foreign currency exchange gains | 1,288 |  |  | 1,094 |
Total deferred tax liabilities | 191,138 |  |  | 179,407 |
Net deferred tax liabilities | $ | 100,334 |  |  | $ | 85,863 |
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 more likely that not 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 (which begin expiring in 2025). 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 $81.1 million, $96.8 million, and $58.2 million in 2023, 2022, and 2021, respectively, and received income tax refunds of $7.2 million, $3.2 million, and $2.6 million in 2023, 2022, and 2021, 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 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 dispo sitions. As of December 30, 2023, unremitted earnings of the Company’s non-U.S. subsidiaries were approximately $1.5 billion. A distribution of such earnings will generally not be subject to U.S. federal income tax. The Company recognized deferred tax liabilities of $18.6 million as of December 30, 2023 and $16.3 million as of December 31, 2022, 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 expired at the end of 2022, but was later extended for an additional three years, retroactive to include all of 2023, as well as 2024 and 2025, and for the other subsidiary the tax holiday expired at the end of 2023. The Company intends to seek an extension for the expired tax holiday. Together, the tax holidays contributed $5.8 million in tax benefits, or $0.23 per diluted share, during 2023. 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 December 30, 2023, December 31, 2022, and January 1, 2022 is as follows:
(in thousands) | Unrecognized Tax Benefits
Balance at January 1, 2022 | $ | 23,445 |
Additions for tax positions related to pre-acquisition periods of acquired subsidiaries | 6,726 |
Additions for tax positions taken in the current year | 2,153 |
Decreases for tax positions taken in the prior year | (957) |
Decreases for lapses in statute of limitations | (758) |
Other | (235) |
Balance at December 31, 2022 | $ | 30,374 |
Additions for tax positions related to pre-acquisition periods of acquired subsidiaries | 1,975 |
Additions for tax positions taken in the current year | 1,200 |
Decreases for tax positions taken in the prior year | (792) |
Decreases for lapses in statute of limitations | (1,051) |
Decreases for settlements | (215) |
Other | (42) |
Balance at December 30, 2023 | $ | 31,449 |
The December 30, 2023 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, approximately $7.8 million may be recognized in 2024 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 penalties associated with uncertain tax positions as part of income tax expense. The Company recognized such interest expense of $0.5 million (net of a $1.7 million decrease due to a lapse in the statute of limitations), $1.4 million (net of a $0.2 million decrease due to a lapse in the statute of limitations) and $1.6 million (net of a $0.6 million decrease due to a lapse in the statute of limitations) in 2023, 2022, and 2021, respectively. Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $14.4 million and $11.8 million as of December 30, 2023 and December 31, 2022, respectively. 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 Germany, the Netherlands, Singapore, 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.

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