XML 46 R29.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Jan. 03, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Earnings (loss) before taxes and equity in net earnings (loss) of affiliate for the years 2020, 2019 and 2018 were taxed under the following jurisdictions:
| 2020 |  | 2019 |  | 2018
| (In millions of dollars)
Domestic | $ | (84.7) |  |  | $ | 46.6 |  |  | $ | 53.1 |
Foreign | (22.1) |  |  | 69.8 |  |  | (62.5) |
Total | $ | (106.8) |  |  | $ | 116.4 |  |  | $ | (9.4) |
The provision for income taxes was as follows:
| 2020 |  | 2019 |  | 2018
| (In millions of dollars)
Current tax expense: |  |  |  |  |
U.S. federal | $ | 8.2 |  |  | $ | 4.7 |  |  | $ | 6.1 |
U.S. state and local | 5.9 |  |  | 3.0 |  |  | 3.1 |
Foreign | 9.0 |  |  | 11.0 |  |  | 11.2 |
Total current | 23.1 |  |  | 18.7 |  |  | 20.4 |
Deferred tax (benefit) expense: |  |  |  |  |
U.S. federal | (36.0) |  |  | (19.4) |  |  | (15.6) |
U.S. state and local | (12.3) |  |  | (1.6) |  |  | 1.0 |
Foreign | (8.8) |  |  | 2.7 |  |  | (32.9) |
Total deferred | (57.1) |  |  | (18.3) |  |  | (47.5) |
Total provision | $ | (34.0) |  |  | $ | 0.4 |  |  | $ | (27.1) |
Deferred income taxes reflect the temporary differences between the asset and liability basis for financial reporting purposes and the amounts used for income tax purposes, at the relevant tax rate. The deferred tax assets and liabilities are comprised of the following:
| 2020 |  | 2019
| (In millions of dollars)
Depreciation and amortization | $ | (10.5) |  |  | $ | (28.6) |
Employee compensation and benefit plans | 61.4 |  |  | 58.4 |
Accrued payroll and related taxes | 29.6 |  |  | — |
Accrued workers’ compensation | 13.4 |  |  | 14.8 |
Investment in Persol Holdings | (39.1) |  |  | (42.5) |
Investment in equity affiliate | (13.1) |  |  | (13.8) |
Operating lease liabilities | 21.7 |  |  | 15.7 |
Loss carryforwards | 33.6 |  |  | 30.4 |
Credit carryforwards | 161.2 |  |  | 167.1 |
Other, net | 4.3 |  |  | 3.5 |
Valuation allowance | (20.2) |  |  | (19.0) |
Net deferred tax assets | $ | 242.3 |  |  | $ | 186.0 |
The deferred tax balance is classified in the consolidated balance sheet as:
| 2020 |  | 2019
| (In millions of dollars)
Deferred tax asset | $ | 282.0 |  |  | $ | 229.1 |
Other long-term liabilities | (39.7) |  |  | (43.1) |
| $ | 242.3 |  |  | $ | 186.0 |
The Company has U.S. general business credit carryforwards of $153.3 million which will expire from 2034 to 2040, foreign tax credit carryforwards of $7.8 million which will expire from 2022 to 2030 and $0.1 million of state credit carryforwards which will expire from 2026 to 2040. The net tax effect of state and foreign loss carryforwards at year-end 2020 totaled $33.6 million, $1.9 million of which expire between 2021 to 2037, and $31.7 million of which have no expiration. The Company has established a valuation allowance for loss carryforwards and future deductible items in certain foreign jurisdictions, and for U.S. foreign tax credit carryforwards. The valuation allowance is determined in accordance with the provisions of ASC Topic 740 (“ASC 740”), Income Taxes, which requires an assessment of both negative and positive evidence when measuring the need for a valuation allowance. The Company’s recent losses in these foreign jurisdictions, and its recent lack of adequate U.S. foreign source income to fully utilize foreign tax credit carryforwards, represented sufficient negative evidence to require a valuation allowance under ASC 740. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support realization of the foreign deferred tax assets. The differences between income taxes from continuing operations for financial reporting purposes and the U.S. statutory rate of 21% in 2020, 2019, and 2018 as follows:
| 2020 |  | 2019 |  | 2018
| (In millions of dollars)
Income tax based on statutory rate | $ | (22.4) |  |  | $ | 24.4 |  |  | $ | (2.0) |
State income taxes, net of federal benefit | (5.1) |  |  | 1.1 |  |  | 3.2 |
Foreign tax rate differential | 2.8 |  |  | 4.6 |  |  | (8.3) |
General business credits | (9.9) |  |  | (16.7) |  |  | (22.6) |
Life insurance cash surrender value | (4.6) |  |  | (6.5) |  |  | 2.1 |
Foreign items | (1.8) |  |  | 0.8 |  |  | 1.9 |
Sale of Brazil operations | (6.6) |  |  | — |  |  | — |
GILTI, net of foreign tax credit | (0.1) |  |  | 0.5 |  |  | 0.5 |
Foreign-derived intangible income | (0.7) |  |  | (0.9) |  |  | (0.9) |
Foreign business taxes | 3.0 |  |  | 3.8 |  |  | 4.2 |
Non-deductible expenses | 0.2 |  |  | 0.7 |  |  | 2.6 |
Tax law change | (1.7) |  |  | (0.2) |  |  | (0.5) |
Change in deferred tax realizability | 0.4 |  |  | (10.6) |  |  | (4.3) |
Stock compensation | 0.6 |  |  | (0.6) |  |  | (3.0) |
Non-deductible goodwill impairment | 11.9 |  |  | — |  |  | — |
Total | $ | (34.0) |  |  | $ | 0.4 |  |  | $ | (27.1) |
Our tax benefit or expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of non-taxable investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, or the tax effects of stock compensation. With the Company’s adoption of ASU 2016-01 in the first quarter of 2018, changes in the fair value of the Company’s investment in Persol Holdings are now recognized in the consolidated statements of earnings. These investment gains or losses are treated as discrete since they cannot be estimated. Several items have contributed to the variance in our income tax benefit or expense over the last three years. The 2020 income tax benefited from lower pretax earnings and included $5.1 million from the loss on our investment in Persol Holdings, $6.6 million from the sale of Brazil operations, and $23.0 million from the impairment of tax deductible goodwill. Income tax expense for 2019 included an $11.0 million expense from the gain on our investment in Persol Holdings, in addition to a $3.9 million charge to establish valuation allowances in Germany, offset by a $14.3 million benefit on the release of valuation allowances in the United Kingdom. Income tax benefit for 2018 included a $29.4 million benefit from the loss on our investment in Persol Holdings and a benefit on the release of valuation allowances in Australia. General business credits primarily represent U.S. work opportunity credits. Foreign items include foreign tax credits, foreign non-deductible expenses and non-taxable income. Foreign business taxes include the French business tax and other taxes based on revenue less certain expenses and are classified as income taxes under ASC 740. Non-deductible expenses include executive compensation and business meals and entertainment. The work opportunity credit program generates a significant tax benefit. It is a temporary provision in the U.S. tax law which was extended under the Consolidated Appropriations Act, 2021, and expires for employees hired after 2025. Provision has not been made for additional income taxes on an estimated $135.2 million of undistributed earnings which are indefinitely reinvested. If these earnings were to be repatriated, the Company could be subject to foreign withholding tax, federal and state income tax, net of federal benefit, and income taxes on foreign exchange gains or losses, of $7.6 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2020 |  | 2019 |  | 2018
| (In millions of dollars)
Balance at beginning of the year | $ | 0.9 |  |  | $ | 1.1 |  |  | $ | 1.2 |
Additions for prior years’ tax positions | — |  |  | — |  |  | — |
Reductions for prior years’ tax positions | — |  |  | — |  |  | — |
Additions for settlements | — |  |  | — |  |  | — |
Reductions for settlements | — |  |  | — |  |  | — |
Reductions for expiration of statutes | (0.4) |  |  | (0.2) |  |  | (0.1) |
Balance at end of the year | $ | 0.5 |  |  | $ | 0.9 |  |  | $ | 1.1 |
If the $0.5 million in 2020, $0.9 million in 2019 and $1.1 million in 2018 of unrecognized tax benefits were recognized, they would have a favorable effect of $0.4 million in 2020, $0.8 million in 2019 and $0.9 million in 2018 on income tax expense. The Company recognizes both interest and penalties as part of the income tax provision. The Company recognized a benefit of $0.1 million in 2020 for interest and penalties. Interest and penalties expense in 2019 and 2018 were not significant. Accrued interest and penalties were $0.1 million at year-end 2020 and $0.2 million at year-end 2019. The Company files income tax returns in the U.S. and in various states and foreign countries. The tax periods open to examination by the major taxing jurisdictions to which the Company is subject include the U.S. for fiscal years 2017 and forward, Canada for fiscal years 2013 and forward, France for fiscal years 2013 and forward, Mexico for fiscal years 2015 and forward, Portugal for fiscal years 2017 and forward, Russia for fiscal years 2018 and forward, and Switzerland for fiscal years 2011 and forward. The Company and its subsidiaries have various income tax returns in the process of examination. The unrecognized tax benefit and related interest and penalty balances include approximately $0.1 million for 2020, related to tax positions which are reasonably possible to change within the next twelve months due to income tax audits, settlements and statute expirations.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration