INCOME TAXES (Tables)

12 Months Ended

Dec. 30, 2017

Schedule of income tax expense (benefit)

The 2017 Tax Act was enacted in December 2017 which comprised a number of changes to the U.S. Internal Revenue Code that impact corporations beginning in 2018; 1) a reduction in the statutory federal corporate income tax rate from 35% to 21%, 2) limiting or eliminating certain tax deductions, and 3) changing the taxation of unremitted foreign earnings. The Company estimated and recognized approximately $41,935 of tax expense for the 2017 Tax Act. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the 2017 Tax Act (see footnote 1).

The Company's accounting for the following element of the 2017 Tax Act is complete:

Reduction of U.S. federal corporate tax rate: The 2017 Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a decrease related to deferred taxes of $20,372, with a corresponding net adjustment to deferred income tax expense for the year ended December 30, 2017.

(9) INCOME TAXES (Continued)

The Company's accounting for the following elements of the 2017 Tax Act is provisional. However, reasonable estimates of certain effects were made and, therefore, the Company recorded the following:

Deemed Repatriation transition tax: The Deemed Repatriation transition tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain of our foreign subsidiaries, which subjected the Company's unremitted foreign earnings of approximately $400,000 to tax at certain specified rates less associated foreign tax credits. To determine the amount of the Transition Tax, the Company determined, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $9,890. The federal portion of this is payable over eight (8) years. However, the Company may adjust this amount in 2018 to more precisely compute the amount of the Transition Tax after assessing additional implementation guidance from the IRS, state tax authorities, the SEC, the FASB, or the Joint Committee on Taxation. The Company previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no related deferred income taxes.

Indefinite reinvestment assertion: The Company reassessed its position with respect to previously untaxed accumulated foreign earnings in its non-U.S. subsidiaries. The Company has taken the position that earnings subject to the Transition Tax are not indefinitely reinvested. The Company was able to make a reasonable estimate and recorded a provisional amount of the deferred income taxes for foreign withholding taxes and U.S. state income taxes of $10,373 and $1,300, respectively. However, the Company may adjust this amount in 2018 to more precisely compute the amount of the Transition Tax after assessing additional implementation guidance. The Company also continues to gather additional information to determine its permanently reinvested position with respect to future foreign earnings.

Income tax expense (benefit) consists of:



	2017			2016			2015
Current:
Federal	$	49,324		$	41,539		$	23,130
State	4,415			5,467			4,431
Foreign	12,880			19,123			15,077
	66,619			66,129			42,638
Non-current:	(229		)	(381		)	(69		)
Deferred:
Federal	(9,626		)	8,504			3,382
State	(385		)	202			(333		)
Foreign	49,766			(32,391		)	1,809
	39,755			(23,685		)	4,858
	$	106,145		$	42,063		$	47,427

Schedule of reconciliation of statutory federal income tax rate and effective tax rate

The reconciliations of the statutory federal income tax rate and the effective tax rate follows:



	2017		2016		2015
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.4		1.7		3.1
Carryforwards, credits and changes in valuation allowances	(1.4	)	2.9		(0.1	)
Foreign tax rate differences	(4.1	)	(4.8	)	(5.7	)
Changes in unrecognized tax benefits	(0.1	)	(0.2	)	(0.1	)
Domestic production activities deduction	(2.1	)	(2.0	)	(3.8	)
Goodwill impairment	—		—		11.3
UK tax rate reduction	—		1.0		7.7
Reversal of contingent liability	—		(2.2	)	—
UK defined benefit pension plan	—		(14.6	)	—
Effects of 2017 Tax Act	18.4		—		—
Other	(0.6	)	2.3		3.6
	46.5	%	19.1	%	51.0	%

Schedule of tax effects of significant items comprising net deferred income tax liabilities

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company’s net deferred income tax liabilities are as follows:

(9) INCOME TAXES (Continued)



	2017			2016
Deferred income tax assets:
Accrued expenses and allowances	$	13,373		$	16,549
Accrued insurance	818			1,071
Tax credits and loss carryforwards	54,521			104,439
Defined benefit pension liability	47,459			80,425
Inventory allowances	3,433			1,385
Accrued warranty	4,602			9,436
Deferred compensation	29,421			37,988
Gross deferred income tax assets	153,627			251,293
Valuation allowance	(27,864		)	(81,923		)
Net deferred income tax assets	125,763			169,370
Deferred income tax liabilities:
Work in progress	1,805			2,161
Property, plant and equipment	26,826			37,961
Intangible assets	39,613			50,405
Withholding taxes	11,673			—
Other liabilities	1,819			6,164
Total deferred income tax liabilities	81,736			96,691
Net deferred income tax asset	$	44,027		$	72,679

Schedule of deferred income tax assets (liabilities) presented on the Consolidated Balance Sheets

Deferred income tax assets (liabilities) are presented as follows on the Consolidated Balance Sheets:



Balance Sheet Caption	2017			2016
Other assets	$	78,933		$	108,482
Deferred income taxes	(34,906		)	(35,803		)
Net deferred income tax asset	$	44,027		$	72,679

Schedule of activity related to unrecognized tax benefits

The following summarizes the activity related to our unrecognized tax benefits in 2017 and 2016, in thousands:



	2017			2016
Gross unrecognized tax benefits—beginning of year	$	3,400		$	3,876
Gross increases—tax positions in prior period	5			99
Gross increases—current‑period tax positions	1,044			695
Settlements with taxing authorities	(65		)	(105		)
Lapse of statute of limitations	(1,188		)	(1,165		)
Gross unrecognized tax benefits—end of year	$	3,196		$	3,400