In fiscal 2017, the Company estimated and recognized approximately $41,935 of tax expense for the 2017 Tax Act. The SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the 2017 Tax Act.

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, the Company 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.

Deemed Repatriation transition tax: The Deemed Repatriation transition tax (“Transition Tax”) is a tax on unremitted foreign earnings of certain foreign subsidiaries, which subjected the Company's unremitted foreign earnings of approximately $394,000 to tax at certain specified rates less associated foreign tax credits. The Company recorded a Transition Tax obligation of $9,890 during fiscal 2017 and reduced this expense by $550 in 2018 upon finalization. At December 28, 2019, $785 of the Transition Tax has not been paid and is due in fiscal 2024.

Indefinite reinvestment assertion: The Company position remains that unremitted foreign earnings subject to the Transition Tax are not indefinitely reinvested. The Company recorded foreign withholding taxes and U.S. state income taxes of $10,373 and $1,300. This expense was recorded in 2017 with a decrease of $140 recognized in 2018 as it was finalized. In addition, the Company has taken the position that on non-U.S. subsidiaries, unremitted foreign earnings are not indefinitely reinvested and it recorded additional foreign withholding taxes and U.S. state income taxes of $754 and $43, respectively during 2019.

Income tax expense (benefit) consists of:



	2019			2018			2017
Current:
Federal	$	27,809		$	21,106		$	49,324
State	5,568			6,585			4,415
Foreign	13,130			17,559			12,880
	46,507			45,250			66,619
Non-current:	(240		)	(456		)	(229		)
Deferred:
Federal	2,108			213			(9,626		)
State	553			9			(385		)
Foreign	1,279			(1,881		)	49,766
	3,940			(1,659		)	39,755
	$	50,207		$	43,135		$	106,145



	2019		2018		2017
Statutory federal income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	2.5		3.5		1.4
Carryforwards, credits and changes in valuation allowances	(1.0	)	3.2		(1.4	)
Foreign tax rate differences	0.3		(1.0	)	(4.1	)
Changes in unrecognized tax benefits	(0.1	)	(0.3	)	(0.1	)
Domestic production activities deduction	—		—		(2.1	)
Goodwill impairment	—		2.2		—
Effects of 2017 Tax Act	—		(0.5	)	18.4
Other	1.3		2.0		(0.6	)
	24.0	%	30.1	%	46.5	%

Fiscal 2018 includes $3,171 of tax expense related to non-tax deductible goodwill and $6,756 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance. Fiscal 2017 includes $41,935 of tax expense related to the 2017 Tax Act.

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:



	2019			2018
Deferred income tax assets:
Accrued expenses and allowances	$	16,148		$	8,268
Tax credits and loss carryforwards	64,116			56,867
Defined benefit pension liability	35,539			36,328
Inventory allowances	5,599			3,320
Accrued compensation and benefits	14,122			13,122
Lease liabilities	21,763			—
Deferred compensation	15,174			16,228
Gross deferred income tax assets	172,461			134,133
Valuation allowance	(35,215		)	(33,228		)
Net deferred income tax assets	137,246			100,905
Deferred income tax liabilities:
Property, plant and equipment	31,628			25,477
Intangible assets	49,686			44,850
Lease assets	22,066			—
Other deferred tax liabilities	6,067			7,291
Total deferred income tax liabilities	109,447			77,618
Net deferred income tax asset	$	27,799		$	23,287

ASC 740 requires an entity to disclose the 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. As a result, the 2018 component of Deferred compensation in the amount of $28,706 has been disaggregated into Deferred compensation and Accrued compensation and benefits in the amounts of $16,228 and $12,478, respectively. In addition, several components previously considered to be significant but no longer rise to a significant level have been aggregated. The 2018 components that have been aggregated are $3,914 of Accrued warranty aggregated with Accrued expenses and allowances, $644 of Accrued insurance aggregated with Accrued compensation and benefits, $1,064 of Work in progress aggregated with Inventory allowances, and $2,746 of Future repatriation of foreign earnings aggregated with Other deferred tax liabilities.

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



Balance Sheet Caption	2019			2018
Other assets	$	75,754		$	66,776
Deferred income taxes	(47,955		)	(43,489		)
Net deferred income tax asset	$	27,799		$	23,287

Management of the Company has reviewed recent operating results and projected future operating results. The Company's belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent years and available tax planning strategies. At December 28, 2019 and December 29, 2018 respectively, there were $64,116 and $56,867 relating to tax credits and loss carryforwards.

Valuation allowances have been established for certain losses that reduce deferred tax assets to an amount that will, more likely than not, be realized. The deferred tax assets at December 28, 2019 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting 2023.

Uncertain tax positions included in other non-current liabilities are evaluated in a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority.

The following summarizes the activity related to our unrecognized tax benefits in 2019 and 2018, in thousands:



	2019			2018
Gross unrecognized tax benefits—beginning of year	$	2,599		$	3,196
Gross increases—tax positions in prior period	29			103
Gross decreases—tax positions in prior period	—			(199		)
Gross increases—current‑period tax positions	593			280
Settlements with taxing authorities	(150		)	(50		)
Lapse of statute of limitations	(771		)	(731		)
Gross unrecognized tax benefits—end of year	$	2,300		$	2,599

There are approximately $685 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statute of limitations. The nature of these uncertain tax positions is generally the computation of a tax deduction or tax credit. During 2019, the Company recorded a reduction of its gross unrecognized tax benefit of $771 with $609 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States. During 2018, the Company recorded a reduction of its gross unrecognized tax benefit of $731, with $577 recorded as a reduction of its income tax expense, due to the expiration of statutes of limitation in the United States. In

addition to these amounts, there was an aggregate of $178 and $196 of interest and penalties at December 28, 2019 and December 29, 2018, respectively. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Earnings.

The Company files income tax returns in the U.S. and various states as well as foreign jurisdictions. Tax years 2016 and forward remain open under U.S. statutes of limitation. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $2,224 and $2,536 at December 28, 2019 and December 29, 2018, respectively.