Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities were (in thousands):


Fiscal Year	2020		2019
Deferred income tax assets:


Inventory	4,095		6,856


Compensation	14,028		11,998






Property, plant and equipment	—		220
Trade names and customer lists	5,163		4,345
Goodwill	13,189		14,947


Foreign accruals	12,582		10,446
Loss carryforwards	54,112		32,158
Tax credit carryforwards	2,771		4,281


Interest disallowance	9,604		16,683


Lease liabilities	54,857		82,511
Other	19,042		36,302
Deferred income tax assets total	$	189,443	$	220,747

Deferred income tax liabilities:


Property, plant and equipment	(5,807)		—
Undistributed earnings of certain foreign subsidiaries	(3,076)		(329)
Right-of-use assets	(36,584)		(65,070)
Other	(1,327)		(1,081)
Deferred income tax liabilities total	$	(46,794)	$	(66,480)

Valuation allowance	(109,250)		(118,089)

Net deferred income tax assets	$	33,399	$	36,178

Net deferred income tax assets	$	33,894	$	38,275
Net deferred income tax liabilities	(495)		(2,097)
Net deferred income tax assets	$	33,399	$	36,178

Operating Loss Carryforwards. At January 2, 2021, the consolidated balance sheets included $45.3 million of deferred tax assets for net operating losses of foreign subsidiaries. The amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):

At January 2, 2021, the consolidated balance sheets included $8.8 million of deferred tax assets for state income tax net operating losses. The state apportioned amounts and the fiscal year of expiration of the loss carryforwards are (in thousands):


Fiscal Year	2020		2019		2018
Current provision:
U.S. federal	$	(96,224)	$	2,338	$	(14,386)
Non-U.S	16,522		28,109		35,854
State and local	(681)		(2,330)		(2,056)
Total current	(80,383)		28,117		19,412
Deferred provision (benefit):
U.S. federal	—		—		—
Non-U.S	4,340		(9,436)		1,696
State and local	—		—		—
Total deferred	4,340		(9,436)		1,696
Provision for income taxes	$	(76,043)	$	18,681	$	21,108


Fiscal Year	2020		2019		2018
Tax at statutory rate	21.0	%	21.0	%	21.0	%

Permanent differences	(4.5)		(2.0)		(0.2)
State, net of federal tax benefit	(0.1)		17.6		(3.8)
Foreign rate differential	1.2		12.8		(12.3)
Withholding taxes	(1.2)		(11.1)		16.3
GILTI tax-net of foreign tax credits	2.1		(24.2)		11.8
U.S. tax on foreign income-net of foreign tax credits	3.9		0.3		6.4
Income tax contingencies	1.6		3.2		(5.0)
Valuation allowances	(0.4)		(53.2)		65.0
Repatriation tax - net impact	—		—		5.9
Deficiencies on employee stock awards	(1.4)		(10.9)		10.1

Tax reform rate reduction impact on deferred tax assets	—		—		(15.8)

Foreign deferred tax rate change	—		(4.5)		—
Non deductible foreign equity awards	(0.4)		(3.2)		5.3
Non deductible officer compensation	0.7		(3.7)		—
Tax exempt foreign capital gain income	—		6.3		—
Deferred adjustment	—		(8.0)		—
CARES Act Rate Benefit	21.7		—		—

Provision for income taxes	44.2	%	(59.6)	%	104.7	%

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which included many beneficial income tax provisions including utilization of net operating losses (“NOLs”), temporary changes to the limitation on interest deductions, and technical corrections to tax depreciation for qualified improvement property. The Tax Act had eliminated the option for most taxpayers to carryback a NOL after 2017. A NOL could only be carried forward and was limited to 80% of taxable income. The CARES Act now allows U.S. taxpayers to carryback a NOL arising in tax years 2018, 2019 and 2020 to prior years when the statutory tax rate was 35%. The ability to file for refunds of prior year U.S. tax liabilities and the release of U.S. valuation allowances were the main drivers of the favorable tax rate in 2020. These favorable impacts were partially offset by foreign valuation allowances on NOLs and deferred tax assets. The Company has recorded a short-term tax receivable of $37.7 million for the 2019 tax NOL carryback refund. A long-term tax receivable of $52.3 million was recorded for the 2020 tax NOL carryback refund.

The Company records a valuation allowance against its deferred tax assets when recovery of those amounts on a jurisdictional basis is not more likely than not. In addition, the Company's U.S. valuation allowance analysis was reduced by $24.4 million due to the use of deferred tax assets in the NOL carryback as compared to fiscal year 2019 and $4.5 million for the use of deferred tax assets in fiscal year 2020. The Company’s foreign valuation allowance on NOLs and deferred tax assets was increased by $20.2 million as compared to fiscal year 2019. The total valuation allowance of $109.3 million at January 2, 2021 was comprised of $56.0 million and $53.3 million attributable to the U.S. and foreign operations, respectively.

The Company will not indefinitely reinvest $260.6 million of previously taxed but undistributed earnings of its foreign subsidiaries as of January 2, 2021. Since under the Tax Act there will be no additional federal income tax when these amounts are repatriated, the Company has only accrued foreign withholding tax and U.S. state income taxes on these earnings with an offsetting valuation allowance. Deferred U.S. federal and state income taxes and foreign taxes are not recorded on the remaining $417.0 million of undistributed earnings of foreign subsidiaries where management plans to continue reinvesting these earnings outside the U.S. As the majority of these earnings have previously been taxed in the U.S., the distribution of the earnings considered indefinitely reinvested would generally be subject only to local country withholding and U.S. state income taxes when distributed, the amount of which is not material.

The total amount of unrecognized tax benefits, excluding interest and penalties that would favorably impact the effective tax rate in future periods if recognized, was $31.5 million, $35.7 million and $33.5 million for fiscal years 2020, 2019 and 2018, respectively. The U.S. Internal Revenue Service has completed examinations of the Company's federal income tax returns through 2013. Fiscal years 2016-2019 remain open for federal income tax examination. The Company is also subject to examinations in various state and foreign jurisdictions for its 2011-2019 tax years, none of which the Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty.

The Company has classified uncertain tax positions as long-term income taxes payable unless such amounts are expected to be paid within twelve months from January 2, 2021. As of January 2, 2021, the Company had recorded $15.4 million of unrecognized tax benefits, excluding interest and penalties, for positions that could be settled or not assessed within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable, respectively. The total amount of accrued income tax-related interest in the Company's consolidated balance sheets was $6.7 million and $4.8 million at January 2, 2021 and December 28, 2019, respectively. The total amount of accrued income tax-related penalties in the Company's consolidated balance sheets was $0.8 million and $1.0 million at January 2, 2021 and December 28, 2019, respectively. The Company accrued income tax-related interest expense of $1.9 million, $1.2 million and $0.8 million in fiscal years 2020, 2019 and 2018, respectively.


Fiscal Year	2020		2019		2018
Balance at beginning of year	$	35,676	$	39,909	$	35,355
Gross increases—tax positions in prior years	1,241		6,639		7,183
Gross decreases—tax positions in prior years	(4,281)		(4)		(124)
Gross increases—tax positions in current year	857		184		576
Settlements	—		(1,901)		—
Lapse in statute of limitations	(2,255)		(8,912)		(2,980)
Change due to currency revaluation	302		(239)		(101)
Balance at end of year	$	31,540	$	35,676	$	39,909