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INCOME TAXES | 12 Months Ended
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Jan. 01, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Provision for Income Taxes The provision for income taxes consisted of the following:
| For the fiscal year ended
(dollars in thousands) | January 1, 2022 |  | January 2, 2021 |  | December 28, 2019
Current tax provision: |  |  |  |  |
Federal | $ | 75,408 |  |  | $ | 31,085 |  |  | $ | 50,162 |
State | 16,905 |  |  | 6,331 |  |  | 10,548 |
Foreign | 19,761 |  |  | 11,105 |  |  | 16,740 |
Total current provision | $ | 112,074 |  |  | $ | 48,521 |  |  | $ | 77,450 |
Deferred tax provision (benefit): |  |  |  |  |
Federal | $ | (10,541) |  |  | $ | (18,449) |  |  | $ | (10,775) |
State | (2,428) |  |  | (3,741) |  |  | (1,882) |
Foreign | (563) |  |  | (1,064) |  |  | (643) |
Total deferred provision | (13,532) |  |  | (23,254) |  |  | (13,300) |
Total provision | $ | 98,542 |  |  | $ | 25,267 |  |  | $ | 64,150 |
The foreign portion of the tax position substantially relates to the Company’s international operations in Canada, Hong Kong and Mexico, in addition to foreign tax withholdings related to the Company’s foreign royalty income. The Company plans to repatriate undistributed earnings from Hong Kong and has provided for deferred income taxes related to these earnings. Since the current U.S. tax regime taxes foreign earnings in the year earned, taxes associated with repatriation are not material. Deferred income taxes have not been provided for undistributed foreign earnings from Canada or Mexico, or any additional outside basis difference inherent in all foreign entities, as these amounts continue to be indefinitely reinvested in foreign operations. Total undistributed earnings from the Company’s subsidiaries in Canada and Mexico amounted to approximately $85.5 million. Unrecognized deferred tax liability related to undistributed earnings from the Company’s subsidiaries in Canada and Mexico is estimated to be approximately $3.6 million, based on applicable withholding taxes, levels of foreign income previously taxed in the U.S. and applicable foreign tax credit limitations. The company accounts for the additional U.S. income tax on its foreign earnings under Global Intangible Low-Taxed Income (“GILTI”) as a period expense in the period in which additional tax is due. The components of income before income taxes were as follows:
| For the fiscal year ended
(dollars in thousands) | January 1, 2022 |  | January 2, 2021 |  | December 28, 2019
Domestic | $ | 333,900 |  |  | $ | 73,525 |  |  | $ | 225,488 |
Foreign | 104,390 |  |  | 61,459 |  |  | 102,464 |
Total | $ | 438,290 |  |  | $ | 134,984 |  |  | $ | 327,952 |
Effective Rate Reconciliation The difference between the Company’s effective income tax rate and the federal statutory tax rate is reconciled below:
| For the fiscal year ended
| January 1, 2022 |  | January 2, 2021 |  | December 28, 2019
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal income tax benefit | 3.0 | % |  | 2.7 | % |  | 2.5 | %
Impact of foreign operations | (1.8) | % |  | (4.8) | % |  | (2.4) | %
Settlement of uncertain tax positions | (0.3) | % |  | (1.3) | % |  | (0.7) | %
Benefit from stock-based compensation | (0.3) | % |  | (1.1) | % |  | (0.8) | %
Goodwill impairments and other | 0.9 | % |  | 2.2 | % |  | — | %
Total | 22.5 | % |  | 18.7 | % |  | 19.6 | %
The Company and its subsidiaries file a consolidated United States federal income tax return, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. In most cases, the Company is no longer subject to U.S. tax authority examinations for years prior to fiscal 2018. Deferred Taxes The following table reflects the Company’s calculation of the components of deferred tax assets and liabilities as of January 1, 2022 and January 2, 2021.
(dollars in thousands) | January 1, 2022 |  | January 2, 2021
Deferred tax assets: | Assets (Liabilities)
Accounts receivable allowance | $ | 7,026 |  |  | $ | 4,072 |
Inventory | 11,923 |  |  | 11,775 |
Accrued liabilities | 22,226 |  |  | 13,807 |
Equity-based compensation | 3,410 |  |  | 5,039 |
Deferred employee benefits | 5,144 |  |  | 7,928 |
Leasing liabilities | 97,269 |  |  | 130,776 |
Other | 3,845 |  |  | 4,961 |
Total deferred tax assets | 150,843 |  |  | 178,358 |
Deferred tax liabilities: |  |  |
Depreciation | (26,472) |  |  | (38,777) |
Leasing assets | (80,818) |  |  | (107,269) |
Tradename and licensing agreements | (76,275) |  |  | (76,409) |
Other | (5,388) |  |  | (5,593) |
Total deferred tax liabilities | (188,953) |  |  | (228,048) |
Net deferred tax liability | $ | (38,110) |  |  | $ | (49,690) |
Amounts recognized in the consolidated balance sheets:
(dollars in thousands) | January 1, 2022 |  | January 2, 2021
| Assets (Liabilities)
Deferred tax assets | $ | 2,800 |  |  | $ | 3,080 |
Deferred tax liabilities | (40,910) |  |  | (52,770) |
Net deferred tax liability | $ | (38,110) |  |  | $ | (49,690) |
Uncertain Tax Positions The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
(dollars in thousands) |
Balance at December 29, 2018 | $ | 13,917 |
Additions based on tax positions related to fiscal 2019 | 2,197 |
Reductions for lapse of statute of limitations | (2,191) |
Balance at December 28, 2019 | $ | 13,923 |
Additions based on tax positions related to fiscal 2020 | 760 |
Reductions for prior year tax positions | (104) |
Reductions for lapse of statute of limitations | (2,056) |
Balance at January 2, 2021 | $ | 12,523 |
Additions based on tax positions related to fiscal 2021 | 810 |
Reductions for prior year tax positions | (2,207) |
Reductions for lapse of statute of limitations | (2,270) |
Balance at January 1, 2022 | $ | 8,856 |
As of January 1, 2022, the Company had gross unrecognized tax benefits of approximately $8.9 million, of which $7.5 million, if ultimately recognized, will affect the Company’s effective tax rate in the period settled. The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions. Because of deferred tax accounting, changes in the timing of these deductions would not affect the annual effective tax rate, but would accelerate the payment of cash to the taxing authorities. Included in the reserves for unrecognized tax benefits are approximately $3.1 million of reserves for which the statute of limitations is expected to expire within the next fiscal year. If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective tax rate for fiscal 2022 and the effective tax rate in the quarter in which the benefits are recognized. The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and penalties related to unrecognized tax benefits as a component of income tax expense. During fiscal 2021, 2020, and 2019, expense recorded on uncertain tax positions was approximately $0.4 million, $0.4 million, and $0.5 million, respectively. The Company had accrued interest on uncertain tax positions of approximately $1.8 million and $2.7 million as of January 1, 2022 and January 2, 2021, respectively.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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