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Income Taxes | 12 Months Ended
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Dec. 29, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The geographic components of earnings (loss) before income taxes are as follows:
| Fiscal Year
(In millions) | 2018 |  | 2017 |  | 2016
United States | $ | 159.2 |  |  | $ | (78.2 | ) |  | $ | 54.7 |
Foreign | 68.2 |  |  | 67.6 |  |  | 55.8 |
Earnings (loss) before income taxes | $ | 227.4 |  |  | $ | (10.6 | ) |  | $ | 110.5 |
The provisions for income tax expense (benefit) consist of the following:
| Fiscal Year
(In millions) | 2018 |  | 2017 |  | 2016
Current expense: |  |  |  |  |
Federal | $ | 6.7 |  |  | $ | 48.1 |  |  | $ | 16.0 |
State | 2.4 |  |  | 1.9 |  |  | 1.4 |
Foreign | 10.9 |  |  | 14.0 |  |  | 11.3 |
Deferred expense (credit): |  |  |  |  |
Federal | 2.1 |  |  | (72.0 | ) |  | (6.9 | )
State | 3.3 |  |  | (0.2 | ) |  | (0.3 | )
Foreign | 1.7 |  |  | (1.7 | ) |  | 1.5 |
Income tax provision | $ | 27.1 |  |  | $ | (9.9 | ) |  | $ | 23.0 |
A reconciliation of the Company’s total income tax expense and the amount computed by applying the statutory federal income tax rate to earnings before income taxes is as follows:
| Fiscal Year
(In millions) | 2018 |  | 2017 |  | 2016
Income taxes at U.S. statutory rates of 21%, 35% and 35% | $ | 47.7 |  |  | $ | (3.7 | ) |  | $ | 38.7 |
State income taxes, net of federal income tax | 2.8 |  |  | (4.2 | ) |  | (6.1 | )
(Nontaxable earnings) non-deductible losses of foreign affiliates: |  |  |  |  |
Cayman Islands | — |  |  | (3.5 | ) |  | (0.4 | )
Other | (0.1 | ) |  | (0.3 | ) |  | 0.2 |
Foreign earnings taxed at rates different from the U.S. statutory rate: |  |  |  |  |
Hong Kong | (10.8 | ) |  | (17.3 | ) |  | (17.3 | )
Other | (3.1 | ) |  | 3.5 |  |  | 3.3 |
Adjustments for uncertain tax positions | (1.4 | ) |  | 0.4 |  |  | 0.2 |
Change in valuation allowance | 3.3 |  |  | 3.0 |  |  | 2.0 |
Change in state tax rates | 1.9 |  |  | 0.1 |  |  | (0.1 | )
Transition tax due to TCJA | (0.1 | ) |  | 58.1 |  |  | — |
Remeasurement of U.S. deferred taxes due to TCJA | — |  |  | (52.5 | ) |  | — |
Global Intangible Low Tax Income tax | 3.7 |  |  | — |  |  | — |
Foreign Derived Intangible Income tax benefit | (6.8 | ) |  | — |  |  | — |
Deferred tax on future cash dividends | (0.9 | ) |  | 3.0 |  |  | — |
Permanent adjustments and non-deductible expenses | (9.6 | ) |  | (0.6 | ) |  | 1.9 |
Other | 0.5 |  |  | 4.1 |  |  | 0.6 |
Income tax provision | $ | 27.1 |  |  | $ | (9.9 | ) |  | $ | 23.0 |
Significant components of the Company’s deferred income tax assets and liabilities are as follows:
(In millions) | December 29, 2018 |  | December 30, 2017
Deferred income tax assets: |  |  |
Accounts receivable and inventory valuation allowances | $ | 4.9 |  |  | $ | 5.9 |
Deferred compensation accruals | 6.9 |  |  | 8.9 |
Accrued pension expense | 21.6 |  |  | 33.9 |
Stock-based compensation | 16.9 |  |  | 16.7 |
Net operating loss and foreign tax credit carryforwards | 19.2 |  |  | 15.1 |
Book over tax depreciation and amortization | 0.8 |  |  | — |
Tenant lease expenses | 4.1 |  |  | 3.2 |
Environmental reserve | 5.0 |  |  | 7.9 |
Other | 5.8 |  |  | 10.4 |
Total gross deferred income tax assets | 85.2 |  |  | 102.0 |
Less valuation allowance | (17.8 | ) |  | (14.5 | )
Net deferred income tax assets | 67.4 |  |  | 87.5 |
Deferred income tax liabilities: |  |  |
Intangible assets | (157.3 | ) |  | (155.3 | )
Tax over book depreciation and amortization | (8.3 | ) |  | (6.3 | )
Other | (6.6 | ) |  | (5.8 | )
Total deferred income tax liabilities | (172.2 | ) |  | (167.4 | )
Net deferred income tax liabilities | $ | (104.8 | ) |  | $ | (79.9 | )
The valuation allowance for deferred income tax assets as of December 29, 2018 and December 30, 2017 was $17.8 million and $14.5 million, respectively. The net increase in the total valuation allowance for fiscal years 2018 and 2017 was $3.3 million and $3.0 million, respectively. The valuation allowance for both years is primarily related to U.S. state and local net operating loss carryforwards as well as a valuation allowance against state deferred tax assets for certain U.S. legal entities, foreign net operating loss carryforwards and tax credit carryforwards in foreign jurisdictions. The ultimate realization of the deferred tax assets depends on the generation of future taxable income in foreign jurisdictions as well as state and local tax jurisdictions. The current year change in the valuation allowance comprises a decrease against the state deferred tax assets of $2.1 million and an increase related to state net operating loss carryforward of $2.8 million, and a net increase relating to the foreign net operating losses and foreign tax credits and other deferred tax assets of $2.6 million. At December 29, 2018, the Company had foreign net operating loss carryforwards of $36.1 million, which have expirations ranging from 2019 to an unlimited term during which they are available to offset future foreign taxable income. The Company had U.S. state net operating loss carryforwards of $140.7 million, which have expirations ranging from 2019 to an unlimited term during which they are available to offset future state taxable income. The Company also had tax credit carryforwards in foreign jurisdictions of $3.6 million, which are available for an unlimited carryforward period to offset future foreign taxes. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
| Fiscal Year
(In millions) | 2018 |  | 2017
Beginning balance | $ | 9.3 |  |  | $ | 8.9 |
Increases related to current year tax positions | 0.8 |  |  | 1.8 |
Decreases related to prior year positions | (2.0 | ) |  | (1.1 | )
Decrease due to lapse of statute | (0.2 | ) |  | (0.3 | )
Ending balance | $ | 7.9 |  |  | $ | 9.3 |
The portion of the unrecognized tax benefits that, if recognized currently, would reduce the annual effective tax rate was $7.1 million and $8.5 million as of December 29, 2018 and December 30, 2017, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively. Interest accrued related to unrecognized tax benefits was $2.4 million and $2.7 million as of December 29, 2018 and December 30, 2017, respectively. The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits. However, any payment of tax is not expected to be material to the consolidated financial statements. For the majority of tax jurisdictions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2014. On December 22, 2017, the TCJA was enacted, which significantly changed U.S. corporate income tax laws by, among other things, reducing the U.S. corporate income tax rate to 21% starting in 2018 and created a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result, the Company recorded income tax expense of $5.6 million during the fourth quarter of 2017. This amount, which is included in the income tax expense (benefit) line item in the consolidated statements of operations, consists of two components: (i) a $58.1 million expense relating to the estimated one-time mandatory transition tax on previously deferred earnings of certain non-U.S. subsidiaries that are owned either wholly or partially by a U.S. subsidiary of the Company to be paid over eight years, and (ii) a $52.5 million benefit resulting from the remeasurement of the Company’s deferred tax assets and liabilities in the U.S. based on the new lower corporate income tax rate. As a result of the TCJA, the Company now intends to repatriate cash held in foreign jurisdictions and as such has recorded a deferred tax liability related to additional state taxes and foreign withholding taxes on the future dividends received in the U.S. from the foreign subsidiaries of $0.6 million and $3.0 million for fiscal years 2018 and 2017, respectively. The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has, therefore, not established a deferred tax liability on the amount of foreign unremitted earnings of $249.3 million at December 29, 2018. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation. In the fourth quarter of fiscal 2018, the Company completed the analysis and computations necessary to finalize the provisional amounts reported in fiscal 2017 prior to the expiration of the December 22, 2018 applicable measurement period. The Company adjusted the computation of transition tax and remeasurement of deferred taxes, previously reported in fiscal 2017, and reflected a $1.2 million adjustment in the fourth quarter of fiscal 2018 to finalize the accounting under SAB 118.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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