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Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Taxes | Taxes 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 | 2022 |  | 2021
Deferred income tax assets: |  |  |
Inventory | $ | 2,985 |  |  | $ | 3,348 |
Compensation | 7,936 |  |  | 12,977 |
Property, plant and equipment | 2,120 |  |  | 319 |
Trade names and customer lists | 3,819 |  |  | 4,243 |
Goodwill | 8,867 |  |  | 11,096 |
Foreign accruals | 4,538 |  |  | 11,446 |
Loss carryforwards | 79,130 |  |  | 57,264 |
Tax credit carryforwards | 5,717 |  |  | 5,715 |
Capitalized research and development | 6,066 |  |  | 3,734 |
Interest disallowance | 12,701 |  |  | 8,977 |
Lease liabilities | 47,354 |  |  | 53,626 |
Other | 15,862 |  |  | 15,302 |
Deferred income tax assets total | $ | 197,095 |  |  | $ | 188,047 |
Deferred income tax liabilities: |  |  |
Right-of-use assets | (36,821) |  |  | (40,451) |
Other | (281) |  |  | (594) |
Deferred income tax liabilities total | $ | (37,102) |  |  | $ | (41,045) |
Valuation allowance | (143,347) |  |  | (122,953) |
Net deferred income tax assets | $ | 16,646 |  |  | $ | 24,049 |
Net deferred income tax assets | $ | 17,262 |  |  | $ | 24,553 |
Net deferred income tax liabilities | (616) |  |  | (504) |
Net deferred income tax assets | $ | 16,646 |  |  | $ | 24,049 |
Operating Loss Carryforwards. At December 31, 2022, the consolidated balance sheets included $58.6 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):
Expires 2023 through 2027 | $ | 41,156 |
Expires 2028 through 2032 | 50,150 |
Expires 2033 through 2037 | 32,664 |
Expires 2038 through 2042 | 82,155 |
Indefinite | 39,605 |
Total loss carryforwards | $ | 245,730 |
At December 31, 2022, the consolidated balance sheets included $11.3 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):
Expires 2023 through 2027 | $ | 6,328 |
Expires 2028 through 2032 | 24,326 |
Expires 2033 through 2037 | 44,635 |
Expires 2038 through 2042 | 87,718 |
Indefinite | 41,450 |
Total loss carryforwards | $ | 204,457 |
At December 31, 2022, the consolidated balance sheets included $9.2 million of deferred tax assets for federal income tax net operating losses. In the U.S., federal income tax net operating losses can be carried forward indefinitely, but are limited to 80% of taxable income. The following table identifies income (loss) before income taxes for the Company's U.S. and non-U.S. based operations for the fiscal years indicated (in thousands):
Fiscal Year | 2022 |  | 2021 |  | 2020
U.S. | $ | (43,927) |  |  | $ | (32,423) |  |  | $ | (163,331) |
Non-U.S. | 21,801 |  |  | 85,474 |  |  | (8,652) |
Total | $ | (22,126) |  |  | $ | 53,051 |  |  | $ | (171,983) |
The Company's provision for income taxes consisted of the following for the fiscal years indicated (in thousands):
Fiscal Year | 2022 |  | 2021 |  | 2020
Current provision: |  |  |  |  |
U.S. federal | $ | 5,901 |  |  | $ | 1,714 |  |  | $ | (96,224) |
Non-U.S | 9,944 |  |  | 17,027 |  |  | 16,522 |
State and local | (98) |  |  | (274) |  |  | (681) |
Total current | 15,747 |  |  | 18,467 |  |  | (80,383) |
Deferred provision (benefit): |  |  |  |  |
U.S. federal | — |  |  | — |  |  | — |
Non-U.S | 5,653 |  |  | 7,960 |  |  | 4,340 |
State and local | — |  |  | — |  |  | — |
Total deferred | 5,653 |  |  | 7,960 |  |  | 4,340 |
Provision for income taxes | $ | 21,400 |  |  | $ | 26,427 |  |  | $ | (76,043) |
A reconciliation of the U.S. federal statutory income tax rates to the Company's effective tax rate is as follows:
Fiscal Year | 2022 |  | 2021 |  | 2020
Tax at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Permanent differences | (4.9) |  |  | (2.5) |  |  | (5.5) |
State, net of federal tax benefit | 8.6 |  |  | (2.0) |  |  | (0.1) |
Foreign rate differential | 21.5 |  |  | (3.8) |  |  | 1.2 |
Withholding taxes | (19.3) |  |  | 7.5 |  |  | (1.2) |
GILTI tax-net of foreign tax credits | — |  |  | 5.7 |  |  | 2.1 |
U.S. tax on foreign income-net of foreign tax credits | — |  |  | — |  |  | 3.9 |
Income tax contingencies | (4.8) |  |  | 3.9 |  |  | 1.6 |
Valuation allowances | (110.6) |  |  | 31.9 |  |  | (0.4) |
R&D/Foreign Tax Credits | — |  |  | (5.6) |  |  | — |
Deficiencies (Benefits) on employee stock awards | (2.7) |  |  | (0.3) |  |  | (1.4) |
APB23 Assertion | 0.6 |  |  | (6.9) |  |  | — |
Return to provision true-up | 4.8 |  |  | — |  |  | — |
Non deductible foreign equity awards | (2.0) |  |  | 0.8 |  |  | (0.4) |
Non deductible officer compensation | (3.4) |  |  | 1.0 |  |  | 0.7 |
CARES Act Rate Benefit | — |  |  | — |  |  | 21.7 |
Foreign currency hedges | 1.2 |  |  | 0.7 |  |  | — |
Adjustments related to intercompany | (5.9) |  |  | 0.4 |  |  | 1.0 |
Other | (0.8) |  |  | (2.0) |  |  | — |
Provision for income taxes | (96.7) | % |  | 49.8 | % |  | 44.2 | %
The fiscal year 2022 effective tax rate was negatively impacted by the low level of pre-tax earnings and increased valuation allowances on U.S. and foreign NOLs and other deferred tax assets. 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. The Company's U.S. valuation allowance analysis was increased by $9.7 million and the foreign valuation allowance on NOL's and deferred tax assets was increased by $10.7 million as compared to January 1, 2022. The total valuation allowance of $143.3 million at December 31, 2022 was comprised of $75.5 million and $67.8 million attributable to the U.S. and foreign operations, respectively. The Company will not indefinitely reinvest $287.0 million of previously taxed and undistributed earnings and profits of its foreign subsidiaries as of December 31, 2022. Since there will be no additional federal income tax when these amounts are repatriated, the Company has only accrued tax on foreign exchange gains with an offsetting valuation allowance. Deferred U.S. federal and state income taxes and foreign taxes are not recorded on the remaining $457.9 million of undistributed earnings and profits 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 $24.0 million, $24.8 million and $31.5 million for fiscal years 2022, 2021 and 2020, respectively. The Company filed amended income tax returns for 2014 and 2015 under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which included a provision for the carryback of U.S. NOLs. The IRS is reviewing the Company’s 2019 and 2020 U.S. tax returns and resulting net operating losses as well as the tax returns for 2014 and 2015 which are the carryback years. The Company has received the income tax refund for the 2019 U.S. tax NOL carryback and expects to receive the refund for the 2020 U.S. tax NOL carryback in late 2023 or early 2024. Fiscal years 2014-2021 remain open for federal income tax examination. The Company is also subject to examinations in various state and foreign jurisdictions for its 2013-2021 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 December 31, 2022. As of December 31, 2022, the Company had recorded $8.3 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 $9.1 million and $8.2 million at December 31, 2022 and January 1, 2022, respectively. The Company accrued no income tax-related penalties in the Company's consolidated balance sheets at December 31, 2022. The Company accrued income tax-related interest expense of $0.9 million, $1.5 million and $1.9 million in fiscal years 2022, 2021 and 2020, respectively. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the fiscal years indicated (in thousands):
Fiscal Year | 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 29,833 |  |  | $ | 31,540 |  |  | $ | 35,676 |
Gross increases—tax positions in prior years | 1,069 |  |  | 2,266 |  |  | 1,241 |
Gross decreases—tax positions in prior years | (1,395) |  |  | (3,016) |  |  | (4,281) |
Gross increases—tax positions in current year | 1,275 |  |  | 1,120 |  |  | 857 |
Settlements | (5,350) |  |  | (630) |  |  | — |
Lapse in statute of limitations | (171) |  |  | (1,188) |  |  | (2,255) |
Change due to currency revaluation | (1,263) |  |  | (259) |  |  | 302 |
Balance at end of year | $ | 23,998 |  |  | $ | 29,833 |  |  | $ | 31,540 |

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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