INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

(10) INCOME TAXES

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries are as follows:

	2022		2021		2020
United States	$	224,370	$	202,051	$	169,281
Foreign		139,518		58,032		23,487
	$	363,888	$	260,083	$	192,768

(10) INCOME TAXES – CONTINUED

Income tax expense (benefit) consists of:

	2022		2021		2020
Current:
Federal	$	48,309	$	30,031	$	30,431
State		11,888		8,891		8,302
Foreign		48,273		20,644		12,730
		108,470		59,566		51,463
Non-current:		1,442		1,777		(451)
Deferred:
Federal		(7,544)		4,587		(6,086)
State		(1,973)		558		(822)
Foreign		8,292		(5,074)		5,511
		(1,225)		71		(1,397)
	$	108,687	$	61,414	$	49,615

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

	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	2.3		2.9		3.5
Carryforwards, credits and changes in valuation allowances	1.0		1.5		(1.6)
Foreign jurisdictional tax rate differences	4.2		(0.1)		(1.7)
Changes in unrecognized tax benefits	0.3		0.7		0.2
Goodwill and intangible impairment	—		—		2.4
Loss on divestiture of offshore wind energy structures business	2.2		—		—
Other	(1.1)		(2.4)		1.9
	29.9	%	23.6	%	25.7	%

Fiscal year 2022 includes $8,166 of tax expense related to the divestiture of the offshore wind energy structures business for which no benefit has been recorded. Fiscal year 2021 includes $1,894 of U.S. tax benefits related to foreign taxes paid offset by $5,102 of valuation allowance recorded against the offshore wind energy structures business deferred tax assets. Fiscal year 2020 includes $4,651 of tax expense related to non-tax deductible impairment of goodwill. Fiscal year 2020 also includes $1,100 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance.

(10) INCOME TAXES – CONTINUED

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 assets/liabilities are as follows:

	2022		2021
Deferred income tax assets:
Accrued expenses and allowances	$	33,577	$	21,241
Tax credits and loss carryforwards		67,249		83,690
Defined benefit pension liability		—		134
Inventory allowances		7,912		2,818
Accrued compensation and benefits		24,398		24,302
Lease liabilities		40,709		41,128
Deferred compensation		16,308		10,893
Gross deferred income tax assets		190,153		184,206
Valuation allowance		(48,974)		(54,256)
Net deferred income tax assets		141,179		129,950
Deferred income tax liabilities:
Property, plant and equipment		45,300		37,686
Intangible assets		52,750		48,244
Defined benefit pension asset		6,054		—
Lease assets		40,708		41,128
Other deferred tax liabilities		4,941		5,041
Total deferred income tax liabilities		149,753		132,099
Net deferred income tax asset (liability)	$	(8,574)	$	(2,149)

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

Balance Sheet Caption	2022		2021
Other assets	$	32,517	$	45,700
Deferred income taxes		(41,091)		(47,849)
Net deferred income tax asset (liability)	$	(8,574)	$	(2,149)

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 31, 2022 and December 25, 2021 respectively, there were $67,249 and $83,690 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. During fiscal 2021, it was determined no longer more likely than not that the offshore wind energy structures business, based in Denmark, would generate future taxable income so a valuation allowance of $5,102 was recognized against their tax loss carryforwards. During fiscal year 2022, the offshore wind energy structures business was sold. Also in 2021, the Company recorded a valuation allowance of $6,472 against the tax attributes related to the acquisition of Prospera. The deferred tax assets at December 31, 2022 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.

(10) INCOME TAXES – CONTINUED

The following summarizes the activity related to the unrecognized tax benefits in 2022 and 2021:

	2022		2021
Gross unrecognized tax benefits—beginning of year	$	2,664	$	1,864
Gross increases—tax positions in prior period		1,133		1,315
Gross decreases—tax positions in prior period		—		(6)
Gross increases—current‑period tax positions		523		240
Settlements with taxing authorities		(1,576)		—
Lapse of statute of limitations		(208)		(749)
Gross unrecognized tax benefits—end of year	$	2,536	$	2,664

There are approximately $1,141 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 2022, the Company recorded a reduction of its gross unrecognized tax benefit of $208 with $165 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States. During 2021, the Company recorded a reduction of its gross unrecognized tax benefit of $749 with $592 recorded as a reduction of 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 $172 and $1,758 of interest and penalties at December 31, 2022 and December 25, 2021, 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 2019 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 $2,447 and $4,324 at December 31, 2022 and December 25, 2021, respectively.