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Income Taxes
 12 Months Ended
Dec. 31, 2022
Text Block [Abstract]  
Income Taxes Income Taxes
The Company generated income (loss) from continuing operations before income tax expense of $352,738, $581,075, and $(142,227) for the years 2022, 2021 and 2020, respectively. The provision for income tax expense (benefit) computed by applying the U.S. statutory rate to income (loss) from continuing operations before income tax expense as reconciled to the actual provisions were: 
 Years Ended
 December 31,
2022		January 1,
2022		January 2,
2021
Income (loss) from continuing operations before income tax expense:
Domestic(45.0)%(3.3)%445.1 %
Foreign145.0 103.3 (345.1)
100.0 %100.0 %100.0 %
Tax expense at U.S. statutory rate21.0 %21.0 %21.0 %
State income tax(1.6)(0.7)17.0 
Tax on actual and planned remittances of foreign earnings(1.6)1.5 5.4 
Tax on foreign earnings due to U.S. tax reform including measurement period adjustments (1)
— (0.3)26.9 
Tax on foreign earnings (U.S. tax reform - GILTI and FDII)3.8 1.7 (2.3)
Foreign taxes less than U.S. statutory rate(14.0)(12.3)39.0 
Statutory stock deduction and other foreign adjustments(2)
22.5 — (34.5)
Employee benefits1.0 0.3 (2.2)
Changes in valuation allowance101.1 1.9 (14.2)
Release of unrecognized tax benefit reserves(1.1)(0.9)13.2 
State tax rate change3.1 1.0 0.3 
Tax provision adjustments and revisions to prior years' returns3.6 (1.6)(1.0)
Nondeductible expenses and tax exempt income, net(1.2)(0.4)10.2 
Nondeductible impairment charges — — (3.7)
Domestic income tax credits(0.7)(0.4)2.3 
Other, net1.3 (0.5)(0.1)
Taxes at effective worldwide tax rates137.2 %10.3 %77.3 %
(1)In 2020, the Company continued to analyze the impacts of the Tax Cuts and Jobs Act (the “Tax Act”) and recently issued regulations that have been published to help taxpayers interpret and apply the legislation. As a result of its analysis, the Company changed its estimate of the tax liability due in connection with the one-time mandatory transition tax and recognized a $4,668 income tax benefit in 2021 and a $38,315 income tax benefit in 2020.
(2)During the year ending January 2, 2021, the Company recorded $49,082 of tax expense due to recapture of previous net operating losses created by statutory impairment. This amount is offset in the change in valuation allowance section of the rate reconciliation. During the year ending December 31, 2022, the Company recorded a deferred tax liability related to tax impairments of subsidiary stock in Switzerland which created a net operating loss carryforward. Pursuant to Swiss tax law, the loss created is subject to recapture for which a deferred tax liability was recorded in excess of the deferred tax asset.
Current and deferred tax provisions (benefits) were:
CurrentDeferredTotal
Year ended December 31, 2022
Domestic$15,188 $201,112 $216,300 
Foreign83,607 95,558 179,165 
State(2,712)91,154 88,442 
$96,083 $387,824 $483,907 
Year ended January 1, 2022
Domestic$(15,176)$6,934 $(8,242)
Foreign66,844 1,421 68,265 
State(2,948)3,032 84 
$48,720 $11,387 $60,107 
Year ended January 2, 2021
Domestic$(7,770)$(136,221)$(143,991)
Foreign46,701 34,066 80,767 
State6,256 (52,972)(46,716)
$45,187 $(155,127)$(109,940)
 
 Years Ended
December 31,
2022		January 1,
2022		January 2,
2021
Cash payments for income taxes$95,331 $95,011 $107,577 
The deferred tax assets and liabilities at the respective year-ends were as follows:
December 31,
2022		January 1,
2022
Deferred tax assets:
Inventories$92,347 $64,425 
Bad debt allowance15,854 15,605 
Accrued expenses15,492 20,863 
Employee benefits55,687 104,845 
Tax credits10,859 4,804 
Net operating loss and other tax carryforwards562,326 410,921 
Leasing112,619 112,423 
Property and equipment6,094 4,707 
Section 163(j)50,695 46,729 
Capitalized research costs17,501 5,873 
Other1,029 — 
Gross deferred tax assets940,503 791,195 
Less valuation allowances(626,540)(306,221)
Deferred tax assets313,963 484,974 
Deferred tax liabilities:
Derivatives13,781 10,303 
Section 481(a) liability— 23,881 
Leasing101,558 99,470 
Accrued tax on unremitted foreign earnings26,128 38,812 
Intangibles41,331 43,917 
Other— 392 
Statutory impairment247,360 — 
Prepaids877 434 
Deferred tax liabilities431,035 217,209 
Net deferred tax assets (liabilities)$(117,072)$267,765 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, the Company believes it is more likely than not it will realize the benefits of these deductible differences, net of the existing valuation allowances.
The changes in the Company’s valuation allowance for deferred tax assets are as follows:
December 28, 2019$188,554 
Charged to income tax expense14,959 
Charged to other accounts(1)
1,341 
January 2, 2021$204,854 
Charged to income tax expense4,343 
Charged to other accounts(1)
97,024 
January 1, 2022$306,221 
Charged to income tax expense356,740 
Charged to other accounts(1)
(36,421)
December 31, 2022$626,540 
(1)Charges to other accounts include the effects of foreign currency translation, purchase accounting adjustments and changes to valuation allowances as a result of intraperiod tax allocations.
As of December 31, 2022, the valuation allowance for deferred tax assets was $626,540, made up of $306,743 for foreign loss carryforwards, $21,232 for other foreign deferred tax assets, $63,619 for federal and state operating loss carryforwards, and $234,946 for other federal and state deferred tax assets. The net change in the total valuation allowance for 2022 was $320,319, which relates to an increase of $24,172 for foreign loss carryforwards, an increase of $9,166 for other foreign deferred tax assets, an increase of $52,035 for federal and state operating loss carryforwards and an increase of $234,946 for other federal and state deferred tax assets.
The domestic net increase reflects a full valuation allowance recorded against federal and state deferred tax assets in 2022. As of December 31, 2022, the Company concluded that, based on its evaluation of all available positive and negative evidence, its U.S. federal and state deferred tax assets were no longer more likely than not realizable. In making this determination, the Company evaluated positive evidence, including its projections of future taxable income which demonstrate a long-term return to profitability in the U.S., and negative evidence, including recent tax losses incurred and expected near term tax losses in connection with its domestic operations and the lack of sufficient taxable temporary differences expected to reverse in future periods, and determined that the negative evidence outweighed the positive.
At December 31, 2022, the Company had gross foreign net operating loss carryforwards of approximately $1,912,611 (on a tax return basis) which are subject to expiration as follows:
Fiscal Year: 
2023$6,055 
20243,921 
20256,076 
20262,320 
20274,168 
Thereafter1,890,071 
At December 31, 2022, the Company had domestic tax credit carryforwards totaling $10,859, which expire beginning after 2022.
At December 31, 2022, the Company had gross federal and state interest carryforwards of approximately $209,536 and $151,718 (on a tax return basis), respectively, which carry forward indefinitely.
At December 31, 2022, the Company had gross federal and state net operating loss carryforwards of approximately $173,305 and $1,018,011 (on a tax return basis), respectively, which expire beginning after 2022.
During 2022, the Company recorded $696,028 of additional foreign net operating losses due to tax-deductible impairments in Switzerland and Luxembourg. These losses are subject to recapture in Switzerland and Luxembourg such that they will be taxable in a future year, therefore deferred tax liabilities were recorded. The Company believes it is reasonably possible that the deferred tax liability in Switzerland will reverse within the next twelve months due to expected actions by the Company in 2023.
The Company has determined that a portion of the Company’s unremitted foreign earnings as of December 31, 2022, totaling approximately $269,019, are not permanently reinvested. The remainder of the Company’s foreign earnings will continue to be permanently reinvested to fund working capital requirements and operations abroad. As of December 31, 2022, the Company has accrued $26,128 of income taxes with respect to the $269,019 of foreign earnings the Company intends to remit in the future. These income tax effects include U.S. federal, state, foreign and withholding tax implications in accordance with the planned remittance of such foreign earnings. An estimate of income tax costs that may be incurred if the permanently reinvested portion of unremitted foreign earnings were in fact remitted is impractical to calculate.
In 2022, 2021, and 2020, the Company recognized reductions of unrecognized tax benefits for tax positions of prior years of $311, $12,599, and $18,385, respectively. In 2022, 2021, and 2020, income tax benefits recognized in connection with the expiration of statutes of limitations were $7,191, $147, and $16,655, respectively. The Company believes it is reasonably possible that the amount of unrecognized tax benefits may decrease by $3,267 within the next 12 months due to expirations in statutes of limitations.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at December 28, 2019 (gross balance of $78,789)$74,385 
Additions based on tax positions related to the current year3,675 
Additions based on tax positions of prior years2,666 
Settlements— 
Lapse of statute of limitations(16,655)
Reductions for tax positions of prior years(18,385)
Balance at January 2, 2021 (gross balance of $46,645)$45,686 
Additions based on tax positions related to the current year3,231 
Additions based on tax positions of prior years3,401 
Settlements— 
Lapse of statute of limitations(147)
Reductions for tax positions of prior years(12,599)
Balance at January 1, 2022 (gross balance of $40,706)$39,572 
Adjustments related to prior year ending balance1,138 
Additions based on tax positions related to the current year2,857 
Additions based on tax positions of prior years798 
Settlements— 
Lapse of statute of limitations(7,191)
Reductions for tax positions of prior years(311)
Balance at December 31, 2022 (gross balance of $37,818)$36,863 
At December 31, 2022, the balance of the Company’s unrecognized tax benefits, which would, if recognized, affect the Company’s annual effective tax rate was $28,444. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company recognized $81, $933 and $(5,206) in 2022, 2021 and 2020, respectively, for interest and penalties classified as income tax expense (benefit) in the Consolidated Statements of Income. At December 31, 2022 and January 1, 2022, the Company had a total of $6,303 and $5,865, respectively, of interest and penalties accrued related to unrecognized tax benefits.
The Company files U.S. federal income tax returns, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. The Company remains subject to U.S. Federal tax examinations for tax years 2017 through 2022. The Company is also subject to examination by various state and international tax authorities. The tax years subject to examination vary by jurisdiction. The Company regularly assesses the outcomes of both ongoing and future examinations for the current or prior years to ensure the Company’s provision for income taxes is sufficient. The Company recognizes liabilities based on estimates of whether additional taxes will be due and believes its reserves are adequate in relation to any potential assessments. The outcome of any one examination, some of which may conclude during the next 12 months, is not expected to have a material impact on the Company’s financial position or results of operations.