INCOME TAXES

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

(10) INCOME TAXES

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

	Fiscal Year Ended
	December 30,		December 31,		December 25,
	2023		2022		2021
United States	$	195,491	$	224,370	$	202,051
Foreign		40,961		139,518		58,032
Earnings before income taxes and equity in loss of nonconsolidated subsidiaries	$	236,452	$	363,888	$	260,083

Income tax expense (benefit) for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 consisted of:

	Fiscal Year Ended
	December 30,		December 31,		December 25,
	2023		2022		2021
Current:
Federal	$	42,226	$	48,309	$	30,031
State		8,480		11,888		8,891
Foreign		56,107		48,273		20,644
Total current income tax expense		106,813		108,470		59,566
Non-current:		1,957		1,442		1,777
Deferred:
Federal		(12,585)		(7,544)		4,587
State		(2,586)		(1,973)		558
Foreign		(3,478)		8,292		(5,074)
Total deferred income tax expense (benefit)		(18,649)		(1,225)		71
Total income tax expense	$	90,121	$	108,687	$	61,414

The reconciliations of the statutory federal income tax rate and the effective tax rate for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

	Fiscal Year Ended
	December 30,		December 31,		December 25,
	2023		2022		2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	1.8		2.3		2.9
Carryforwards, credits and changes in valuation allowances	(2.4)		1.0		1.5
Foreign jurisdictional tax rate differences	4.6		4.2		(0.1)
Changes in unrecognized tax benefits	0.8		0.3		0.7
Impairment of long-lived assets	11.9		—		—
Excess tax benefit on equity compensation	1.1		0.5		0.7
Loss from divestiture of offshore wind energy structures business	—		2.2		—
Other	(0.7)		(1.6)		(3.1)
Effective tax rate	38.1	%	29.9	%	23.6	%

The fiscal year ended December 30, 2023 included $28,079 of tax expense related to non-tax deductible impairment of goodwill. The fiscal year ended December 31, 2022 included $8,166 of tax expense related to the divestiture of the offshore wind energy structures business for which no benefit was recorded. The fiscal year ended December 25, 2021 included $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.

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) as of December 30, 2023 and December 31, 2022 were as follows:

	December 30,		December 31,
	2023		2022
Deferred income tax assets:
Accrued expenses and allowances	$	36,883	$	25,927
Tax credits and loss carryforwards		58,519		67,249
Inventory allowances		8,427		7,912
Accrued compensation and benefits		23,880		24,398
Lease liabilities		41,769		40,709
Research and development expenditures		22,751		7,650
Deferred compensation		16,163		16,308
Gross deferred income tax assets		208,392		190,153
Valuation allowance		(48,632)		(48,974)
Net deferred income tax assets		159,760		141,179
Deferred income tax liabilities:
Property, plant, and equipment		42,299		45,300
Intangible assets		52,017		52,750
Defined benefit pension asset		3,851		6,054
Lease assets		42,717		40,708
Other deferred tax liabilities		6,616		4,941
Total deferred income tax liabilities		147,500		149,753
Net deferred income tax assets (liabilities)	$	12,260	$	(8,574)

Deferred income tax assets (liabilities) were presented as follows as of December 30, 2023 and December 31, 2022 in the Consolidated Balance Sheets:

	December 30,		December 31,
	2023		2022
Other non-current assets	$	33,465	$	32,517
Deferred income taxes		(21,205)		(41,091)
Net deferred income tax assets (liabilities)	$	12,260	$	(8,574)

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 fiscal years and available tax planning strategies. As of December 30, 2023 and December 31, 2022, respectively, there were $58,519 and $67,249 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, the Company recorded a valuation allowance of $6,472 against the tax attributes related to the acquisition of Prospera. The deferred tax assets as of December 30, 2023 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting in 2024.

Uncertain tax positions included in “Other non-current liabilities” in the Consolidated Balance Sheets 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 the unrecognized tax benefits for the fiscal years ended December 30, 2023 and December 31, 2022:

	Fiscal Year Ended
	December 30,		December 31,
	2023		2022
Gross unrecognized tax benefits—beginning of period	$	2,536	$	2,664
Gross increases—tax positions in prior period		2,174		1,133
Gross increases—current‑period tax positions		370		523
Settlements with taxing authorities		(32)		(1,576)
Lapses of statutes of limitation		(742)		(208)
Gross unrecognized tax benefits—end of period	$	4,306	$	2,536

There are approximately $1,514 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statutes of limitation. The nature of these uncertain tax positions is generally the computation of a tax deduction or a tax credit. During the fiscal year ended December 30, 2023, the Company recorded a reduction of its gross unrecognized tax benefit of $742, with $586 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the U.S. During the fiscal year ended December 31, 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 U.S. In addition to these amounts, there was an aggregate of $442 and $172 of interest and penalties as of December 30, 2023 and December 31, 2022, 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 2020 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 $4,372 and $2,447 as of December 30, 2023 and December 31, 2022, respectively.

The Organisation for Economic Co-operation and Development (“OECD”) has released the Pillar Two Model Rules Framework (the “Framework”) defining the global minimum tax rules, which contemplate a minimum tax rate of 15% and continues to release additional guidance. Although it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, certain countries in which the Company operates have adopted legislation effective January 1, 2024, and other countries are in the process of introducing legislation to implement the minimum tax directive. Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive. The Company will continue to monitor the implementation of the Framework by the countries in which the Company operates. The Company does not expect the Framework to have a material impact on its Consolidated Financial Statements.