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INCOME TAXES
 12 Months Ended
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, 2022January 2, 2021December 28, 2019
Current tax provision:
Federal$75,408 $31,085 $50,162 
State16,905 6,331 10,548 
Foreign19,761 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, 2022January 2, 2021December 28, 2019
Domestic$333,900 $73,525 $225,488 
Foreign104,390 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, 2022January 2, 2021December 28, 2019
Statutory federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal income tax benefit3.0 %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 other0.9 %2.2 %— %
Total22.5 %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, 2022January 2, 2021
Deferred tax assets:Assets (Liabilities)
Accounts receivable allowance$7,026 $4,072 
Inventory11,923 11,775 
Accrued liabilities22,226 13,807 
Equity-based compensation3,410 5,039 
Deferred employee benefits5,144 7,928 
Leasing liabilities97,269 130,776 
Other3,845 4,961 
Total deferred tax assets150,843 178,358 
Deferred tax liabilities:
Depreciation(26,472)(38,777)
Leasing assets(80,818)(107,269)
Tradename and licensing agreements(76,275)(76,409)
Other(5,388)(5,593)
Total deferred tax liabilities(188,953)(228,048)
Net deferred tax liability$(38,110)$(49,690)
Amounts recognized in the consolidated balance sheets:
(dollars in thousands)January 1, 2022January 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 20192,197 
Reductions for lapse of statute of limitations(2,191)
Balance at December 28, 2019$13,923 
Additions based on tax positions related to fiscal 2020760 
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 2021810 
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.