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Income Taxes | 12 Months Ended
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Dec. 28, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 16. Income Taxes The components of income from continuing operations before income taxes and noncontrolling interests were as follows:
(In millions) |  |  | 2024 |  |  |  | 2023 |  |  | 2022 |
Domestic operations |  |  | $ | 518.8 |  |  |  | $ | 418.1 |  |  | $ | 563.1 |
Foreign operations |  |  |  | 86.7 |  |  |  |  | 99.8 |  |  |  | 104.0 |
Income from continuing operations before income taxes |  |  | $ | 605.5 |  |  |  | $ | 517.9 |  |  | $ | 667.1 |
Income tax expense in the consolidated statement of income consisted of the following:
(In millions) |  |  | 2024 |  |  |  | 2023 |  |  | 2022 |
Current |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | $ | 97.3 |  |  |  | $ | 86.9 |  |  | $ | 62.4 |
Foreign |  |  |  | 20.7 |  |  |  |  | 38.3 |  |  |  | 34.3 |
State and other |  |  |  | 15.6 |  |  |  |  | 15.2 |  |  |  | 16.0 |
Deferred |  |  |  |  |  |  |  |  |  |  |
Federal |  |  |  | 1.4 |  |  |  |  | (21.2 | ) |  |  | 15.3 |
Foreign |  |  |  | 0.2 |  |  |  |  | (3.5 | ) |  |  | 1.5 |
State and Local |  |  |  | (1.6 | ) |  |  |  | (3.3 | ) |  |  | (2.3 | )
Total income tax expense |  |  | $ | 133.6 |  |  |  | $ | 112.4 |  |  | $ | 127.2 |
A reconciliation between the federal statutory tax rate and the effective tax rate is as follows:
(In millions) |  |  | 2024 |  |  |  | 2023 |  |  | 2022 |
Income tax expense computed at federal statutory income tax rate |  |  | $ | 127.2 |  |  |  | $ | 108.8 |  |  | $ | 140.1 |
State and local income taxes, net of federal tax benefit |  |  |  | 18.9 |  |  |  |  | 13.2 |  |  |  | 13.2 |
Foreign taxes at a different rate than U.S. federal statutory income tax rate |  |  |  | 4.6 |  |  |  |  | 5.2 |  |  |  | 9.1 |
Net adjustments for uncertain tax positions |  |  |  | (4.7 | ) |  |  |  | (8.0 | ) |  |  | (26.2 | )
Share-based compensation |  |  |  | (2.0 | ) |  |  |  | (1.3 | ) |  |  | (5.4 | )
Valuation allowance (decrease) increase |  |  |  | (7.8 | ) |  |  |  | 1.7 |  |  |  | (5.8 | )
Non-deductible executive compensation |  |  |  | 3.9 |  |  |  |  | 3.5 |  |  |  | 7.5 |
Research and development credit |  |  |  | (4.4 | ) |  |  |  | (5.1 | ) |  |  | (3.0 | )
Miscellaneous other, net |  |  |  | (2.1 | ) |  |  |  | (5.6 | ) |  |  | (2.3 | )
Income tax expense as reported |  |  | $ | 133.6 |  |  |  | $ | 112.4 |  |  | $ | 127.2 |
Effective income tax rate |  |  |  | 22.1 | % |  |  |  | 21.7 | % |  |  | 19.1 | %
The 2024 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation, partially offset by favorable benefits related to a valuation allowance release and decreases in uncertain tax positions and tax credits. The 2023 and 2022 effective income tax rates were unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation. Both 2023 and 2022 expenses were offset by favorable benefits for the release of uncertain tax positions, primarily related to statute of limitations lapses, tax credits and share-based compensation. The 2022 effective income rate was also favorably impacted by audit closures and a valuation allowance decrease. In 2021, the Organization for Economic Cooperation & Development (“OECD”), with the support of over 130 countries, endorsed a framework (“Pillar Two”), which includes establishing a 15 percent global minimum corporate tax rate on a country-by-country basis. Numerous countries have adopted legislation in support of Pillar Two or are in the process of doing so, with certain rules that became effective on January 1, 2024, and the remainder that became effective on January 1, 2025. Pillar Two did not have a material impact on the Company's financial statements in 2024. The Company is continuing to monitor and evaluate Pillar Two legislation and does not expect it to have a material impact on the Company’s tax liability in 2025. A reconciliation of the beginning and ending amount of unrecognized tax benefits (“UTBs”) is as follows:
(In millions) |  |  | 2024 |  |  |  | 2023 |  |  | 2022 |
Unrecognized tax benefits—beginning of year |  |  | $ | 25.6 |  |  |  | $ | 33.4 |  |  | $ | 83.1 |
Gross additions—current year tax positions |  |  |  | 1.9 |  |  |  |  | 2.1 |  |  |  | 2.1 |
Gross additions—prior year tax positions |  |  |  | 5.7 |  |  |  |  | 0.2 |  |  |  | — |
Gross reductions—prior year tax positions |  |  |  | (8.0 | ) |  |  |  | (10.1 | ) |  |  | (50.5 | )
Gross reductions—settlements with taxing authorities |  |  |  | — |  |  |  |  | — |  |  |  | (1.3 | )
Unrecognized tax benefits—end of year |  |  | $ | 25.2 |  |  |  | $ | 25.6 |  |  | $ | 33.4 |
The amount of UTBs that, if recognized as of December 28, 2024, would affect the Company’s effective tax rate is $25.2 million. It is reasonably possible that, within the next twelve months, total UTBs may decrease by $6.1 million primarily as a result of the lapse of statutes of U.S. federal, state and foreign income taxes. The Company classifies interest and penalty accruals related to UTBs as income tax expense. In 2024, the Company recognized an interest and penalty benefit of $1.6 million. In 2023 and 2022, the Company recognized an interest and penalty expense of approximately $1.2 million and a $6.4 million benefit, respectively. The Company files income tax returns in the U.S., various state, and foreign jurisdictions. The Company is currently under audit by the U.S. Internal Revenue Service (IRS) for 2022 and is generally subject to examination by the IRS for years 2021 and later. In addition to the U.S., the Company has tax years that remain open and subject to examination by tax authorities in the following major taxing jurisdictions: Canada for years after 2019, Mexico for years after 2018 and China for years after 2018. The components of net deferred tax assets (liabilities) as of December 28, 2024 and December 30, 2023 were as follows:
(In millions) |  |  | 2024 |  |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |  |  |
Compensation and benefits |  |  | $ | 27.2 |  |  |  | $ | 29.5 |
Defined benefit plans |  |  |  | 7.7 |  |  |  |  | 10.9 |
Capitalized inventories |  |  |  | 18.1 |  |  |  |  | 24.5 |
Capitalized research and development costs |  |  |  | 54.0 |  |  |  |  | 37.4 |
Accounts receivable |  |  |  | 6.5 |  |  |  |  | 4.9 |
Operating lease liabilities |  |  |  | 37.7 |  |  |  |  | 43.2 |
Other accrued expenses |  |  |  | 35.8 |  |  |  |  | 40.3 |
Net operating loss and other tax carryforwards |  |  |  | 29.1 |  |  |  |  | 27.5 |
Valuation allowance |  |  |  | (8.0 | ) |  |  |  | (15.1 | )
Miscellaneous |  |  |  | 6.3 |  |  |  |  | 6.7 |
Total deferred tax assets |  |  |  | 214.4 |  |  |  |  | 209.8 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  |  | (81.3 | ) |  |  |  | (75.1 | )
Intangible assets |  |  |  | (163.5 | ) |  |  |  | (153.2 | )
Operating lease assets |  |  |  | (36.4 | ) |  |  |  | (42.7 | )
Other investments |  |  |  | (24.8 | ) |  |  |  | (26.4 | )
Miscellaneous |  |  |  | (6.4 | ) |  |  |  | (5.2 | )
Total deferred tax liabilities |  |  |  | (312.4 | ) |  |  |  | (302.6 | )
Net deferred tax liability |  |  | $ | (98.0 | ) |  |  | $ | (92.8 | )
In accordance with ASC requirements for Income Taxes, deferred taxes were classified in the consolidated balance sheets as of December 28, 2024 and December 30, 2023 as follows:
(In millions) |  |  | 2024 |  |  |  | 2023 |
Other assets |  |  |  | 19.4 |  |  |  |  | 18.5 |
Deferred income taxes |  |  |  | (117.4 | ) |  |  |  | (111.3 | )
Net deferred tax liability |  |  | $ | (98.0 | ) |  |  | $ | (92.8 | )
As of December 28, 2024 and December 30, 2023, the Company had deferred tax assets related to net operating losses and other tax carryforwards of $29.1 million and $27.5 million, respectively. Approximately $3.8 million expires between 2025 and 2029, and the remainder will expire in 2030 and thereafter. The Company has provided a valuation allowance to reduce the carrying value of certain deferred tax assets. The valuation allowance is $8.0 million in 2024 and $15.1 million in 2023. Management has concluded that, based on the available evidence, it is more likely than not that the deferred tax assets will not be fully realized. Accumulated foreign earnings and profits of the Company’s foreign subsidiaries as of December 31, 2017, were subject to a deemed repatriation tax and should not be subject to additional U.S. federal income tax upon an actual repatriation of these earnings. As of December 28, 2024, the Company has recorded an estimated deferred tax liability of $0.6 million for taxes that will be payable upon distribution of these earnings. Subsequent to December 31, 2017, we consider the unremitted earnings of certain foreign subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. We have not provided deferred taxes on the remaining book over tax outside basis difference of $270.3 million related to these subsidiaries. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed related to these earnings is $18.0 million.

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