XML 34 R19.htm IDEA: XBRL DOCUMENT v3.20.4
INCOME TAXES
 12 Months Ended
Dec. 26, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries are as follows:
202020192018
United States
$169,281 $166,108 $137,744 
Foreign
23,487 33,750 15,589 
$192,768 $199,858 $153,333 
Income tax expense (benefit) consists of:
202020192018
Current:
Federal
$30,431 $27,809 $21,106 
State
8,302 5,568 6,585 
Foreign
12,730 13,130 17,559 
51,463 46,507 45,250 
Non-current:
(451)(240)(456)
Deferred:
Federal
(6,086)47 2,290 
State
(822)160 405 
Foreign
5,511 1,279 (1,881)
(1,397)1,486 814 
$49,615 $47,753 $45,608 

    The reconciliations of the statutory federal income tax rate and the effective tax rate follows:
202020192018
Statutory federal income tax rate
21.0 %21.0 %21.0 %
State income taxes, net of federal benefit
3.5 2.5 3.5 
Carryforwards, credits and changes in valuation allowances
(1.6)(1.0)3.2 
Foreign tax rate differences
(1.7)0.3 (1.0)
Changes in unrecognized tax benefits
0.2 (0.1)(0.3)
Goodwill and intangible impairment2.4 — 2.2 
Effects of 2017 Tax Act
— — (0.5)
Other
1.9 1.2 1.7 
25.7 %23.9 %29.7 %
    
    Fiscal years 2020 and 2018 include $4,651 and $3,171 of tax expense related to non-tax deductible impairment of goodwill. Fiscal years 2020 and 2018 also include $1,100 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.
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:
20202019
Deferred income tax assets:
Accrued expenses and allowances
$17,203 $16,148 
Tax credits and loss carryforwards
81,912 64,116 
Defined benefit pension liability
30,623 35,539 
Accrued compensation and benefits
23,545 14,122 
Lease liabilities
23,715 21,763 
Deferred compensation
13,883 15,174 
Gross deferred income tax assets
190,881 166,862 
Valuation allowance
(44,451)(35,215)
Net deferred income tax assets
146,430 131,647 
Deferred income tax liabilities:
Property, plant and equipment
35,701 31,628 
Intangible assets
43,699 49,686 
Inventory allowances
5,705 5,352 
Lease assets
23,715 22,066 
Other deferred tax liabilities
5,248 6,067 
Total deferred income tax liabilities
114,068 114,799 
Net deferred income tax asset
$32,362 $16,848 


    Deferred income tax assets (liabilities) are presented as follows on the Consolidated Balance Sheets:
     Balance Sheet Caption
20202019
Other assets
$74,051 $75,754 
Deferred income taxes (41,689)(58,906)
Net deferred income tax asset
$32,362 $16,848 
    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 26, 2020 and December 28, 2019 respectively, there were $81,912 and $64,116 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 26, 2020 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting in 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 2020 and 2019, in thousands:
20202019
Gross unrecognized tax benefits—beginning of year
$2,300 $2,599 
Gross increases—tax positions in prior period
— 29 
Gross decreases—tax positions in prior period
(1)— 
Gross increases—current‑period tax positions
398 593 
Settlements with taxing authorities
(183)(150)
Lapse of statute of limitations
(650)(771)
Gross unrecognized tax benefits—end of year
$1,864 $2,300 
There are approximately $973 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 2020, the Company recorded a reduction of its gross unrecognized tax benefit of $650 with $513 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States. During 2019, the Company recorded a reduction of its gross unrecognized tax benefit of $771, with $609 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 $845 and $178 of interest and penalties at December 26, 2020 and December 28, 2019, 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 $2,547 and $2,224 at December 26, 2020 and December 28, 2019, respectively.