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Income Taxes | 12 Months Ended
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Dec. 29, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consisted of the following (U.S. dollars in millions):
| Year ended
| December 29, 2023 |  | December 30, 2022 |  | December 31, 2021
Current: |  |  |  |  |
U.S. federal income tax | $ | 0.1 |  |  | $ | 0.3 |  |  | $ | (2.1) |
State | 1.0 |  |  | 0.7 |  |  | 0.3 |
Non-U.S. | 20.8 |  |  | 16.6 |  |  | 18.8 |
| 21.9 |  |  | 17.6 |  |  | 17.0 |
Deferred: |  |  |  |  |
U.S. federal income tax | (1.1) |  |  | — |  |  | (5.0) |
State | (0.2) |  |  | — |  |  | (1.2) |
Non-U.S. | (2.5) |  |  | 2.5 |  |  | (8.8) |
| (3.8) |  |  | 2.5 |  |  | (15.0) |
| $ | 18.1 |  |  | $ | 20.1 |  |  | $ | 2.0 |
Income before income taxes consisted of the following (U.S. dollars in millions):
| Year ended
| December 29, 2023 |  | December 30, 2022 |  | December 31, 2021
U.S. | $ | (136.4) |  |  | $ | 1.0 |  |  | $ | (24.7) |
Non-U.S. | 152.9 |  |  | 116.8 |  |  | 106.6 |
| $ | 16.5 |  |  | $ | 117.8 |  |  | $ | 81.9 |
The differences between the reported provision for income taxes and income taxes computed at the U.S. statutory federal income tax rate are explained in the following reconciliation (U.S. dollars in millions):
| Year ended (1)
| December 29, 2023 |  | December 30, 2022 |  | December 31, 2021
Income tax provision computed at the U.S. statutory federal rate | $ | 3.4 |  |  | $ | 24.7 |  |  | $ | 17.2 |
Effect of tax rates on non-U.S. operations | (70.8) |  |  | (71.7) |  |  | (67.9) |
Provision for uncertain tax positions | 1.5 |  |  | 1.7 |  |  | 2.3 |
Non-deductible interest | 23.1 |  |  | 0.7 |  |  | 0.6 |
Foreign exchange | 8.1 |  |  | 2.8 |  |  | (6.1) |
Non-deductible intercompany charges | — |  |  | 0.5 |  |  | 0.1 |
Non-deductible differences | (0.7) |  |  | 0.9 |  |  | 2.0 |
Non-taxable income/loss | (0.5) |  |  | 0.6 |  |  | (4.8) |
Non-deductible impairment charges | 5.4 |  |  | — |  |  | 1.1 |
Adjustment to deferred balances | — |  |  | — |  |  | 0.1 |
Other | 0.8 |  |  | (3.3) |  |  | 3.1 |
State tax benefit | (4.4) |  |  | 0.1 |  |  | (1.0) |
Other taxes in lieu of income | 3.5 |  |  | 5.5 |  |  | 4.5 |
Change in deferred rate | — |  |  | — |  |  | 0.1 |
Benefit from net operating loss carryback provision (C.A.R.E.S. Act) | — |  |  | — |  |  | (0.8) |
Increase in valuation allowance (2) | 48.7 |  |  | 57.6 |  |  | 51.5 |
Provision for income taxes | $ | 18.1 |  |  | $ | 20.1 |  |  | $ | 2.0 |
_____________ (1) Certain amounts from prior year have been conformed to current year presentation (2) The increase in valuation allowance includes effects of foreign exchange and adjustments to deferred tax balances which were fully offset by valuation allowance. Deferred income tax assets and liabilities consisted of the following (U.S. dollars in millions):
|  | December 29, |  | December 30,
Deferred tax liabilities: | 2023 |  | 2022
| Allowances and other accrued liabilities | $ | (0.2) |  |  | $ | (0.1) |
| Inventories | (14.8) |  |  | (17.1) |
| Property, plant and equipment | (69.7) |  |  | (75.7) |
| Equity in earnings of unconsolidated companies | (0.5) |  |  | (0.2) |
| Pension obligations | (2.7) |  |  | (2.6) |
| Other noncurrent deferred tax liabilities | (28.1) |  |  | (26.8) |
| ROU assets | (21.6) |  |  | (21.0) |
| Total noncurrent deferred tax liabilities | $ | (137.6) |  |  | $ | (143.5) |
Deferred tax assets: |  |  |
| Allowances and other accrued assets | $ | 13.9 |  |  | $ | 17.9 |
| Inventories | 9.6 |  |  | 5.9 |
| Pension obligations | 22.4 |  |  | 21.4 |
| Property, plant and equipment | 3.6 |  |  | 1.0 |
| Post-retirement benefits other than pension | 2.7 |  |  | 3.6 |
| Net operating loss carryforwards | 434.5 |  |  | 434.2 |
| Capital loss carryover | 2.2 |  |  | 2.1 |
| Other noncurrent assets | 129.7 |  |  | 93.9 |
| Operating lease | 23.5 |  |  | 22.9 |
| Total noncurrent deferred tax assets | 642.1 |  |  | 602.9 |
| Valuation allowance | (525.7) |  |  | (483.5) |
| Total deferred tax assets, net | $ | 116.4 |  |  | $ | 119.4 |
Net deferred tax liabilities | $ | (21.2) |  |  | $ | (24.1) |
The valuation allowance increased by $42.2 million in 2023. The increase in 2023 relates primarily to valuation allowance on additional net operating loss carryforwards combined with the effect of a change in judgment about our ability to realize deferred tax assets in future years, due to our current and foreseeable operations. At December 29, 2023, we are no longer permanently reinvested on certain foreign earnings, accordingly, there is a deferred tax liability of $0.7 million as of December 29, 2023 related to the foreign earnings which are not considered to be permanently reinvested. Additionally, the undistributed earnings of our foreign subsidiaries amounted to $770.6 million. Those earnings are considered to be either indefinitely reinvested, or the earnings could be distributed tax free. To the extent the earnings are considered indefinitely reinvested, determination of the amount of the unrecognized deferred tax liability is not practicable due to the complexities associated with its hypothetical calculation. At December 29, 2023, we had approximately $1,664.4 million of federal and foreign tax operating loss carryforwards expiring as follows (U.S. dollars in millions):
Expires: |
2024 | $ | 1.4 |
2025 | 24.3 |
2026 | 20.1 |
2027 | 11.2 |
2028 and beyond | 13.3 |
No expiration | 1,594.1 |
| $ | 1,664.4 |
A reconciliation of the beginning and ending amount of uncertain tax positions excluding interest and penalties is as follows (U.S. dollars in millions):
| December 29, 2023 |  | December 30, 2022 |  | December 31, 2021
Beginning balance | $ | 6.1 |  |  | $ | 5.0 |  |  | $ | 3.5 |
Gross increases - current-period tax positions | 1.2 |  |  | 1.2 |  |  | 1.7 |
Settlements | (1.1) |  |  | — |  |  | — |
Foreign exchange | 0.2 |  |  | (0.1) |  |  | (0.2) |
Ending balance | $ | 6.4 |  |  | $ | 6.1 |  |  | $ | 5.0 |
We accrued $9.9 million in 2023 and $9.2 million in 2022, for uncertain tax positions, including interest and penalties that, if recognized would affect the effective income tax rate. The tax years 2012-2023 remain subject to examination by taxing authorities throughout the world in major jurisdictions, such as Costa Rica, Luxembourg, Switzerland and the United States. We classify interest and penalties on uncertain tax positions as a component of income tax expense in the Consolidated Statements of Operations. Accrued interest and penalties related to uncertain tax positions are $3.5 million and $3.0 million for December 29, 2023 and December 30, 2022, respectively and are included in other noncurrent liabilities. In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $165.4 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities. In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for an injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.0 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the year ended December 29, 2023. In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $28.5 million, and a net book value of $4.6 million as of the year ended December 29, 2023. The registration of this real estate collateral does not affect our operations in the country. In the other foreign jurisdiction, the administrative court denied our appeal, and on March 4, 2020 we filed an action in the judicial court to contest the administrative court's decision. The case is still pending. We will continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process. We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. Accordingly, we have not accrued any additional amounts based upon the proposed adjustments. There can be no assurance that these matters will be resolved in our favor, and an adverse outcome of either matter, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows.

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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