Income Taxes

12 Months Ended

Jan. 01, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Significant components of the provision for income taxes, including those related to non-controlling interest, are as follows (in thousands):

	2021		2020		2019
Current:
Federal	$	14,115	$	18,365	$	20,122
State	3,957		6,030		5,418
Foreign	766		146		662
Current provision	18,838		24,541		26,202
Deferred:
Federal	(699)		(9,100)		4,140
State	437		(2,395)		1,634
Foreign	(120)		(580)		235
Deferred provision	(382)		(12,075)		6,009
Total income tax expense	$	18,456	$	12,466	$	32,211

The differences between the actual tax expense and tax expense computed at the statutory United States federal tax rate are explained as follows (in thousands):

	2021		2020		2019
Federal statutory tax expense	$	16,436	$	11,420	$	29,970
State taxes, net of federal tax effect	3,687		2,387		5,159
Credit for research activities	(3,965)		(3,891)		(4,050)
Valuation allowance	(221)		1,264		98
Goodwill impairment	137		1,453		—
Executive compensation limitation	1,179		529		139
Other – net	1,203		(696)		895
Total income tax expense	$	18,456	$	12,466	$	32,211

In the current year, the 2020 federal income tax returns were completed resulting in a $0.4 million benefit related to a change in estimate of research and development credits and other items.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Corporation’s deferred tax liabilities and assets are as follows (in thousands):

	January 1, 2022		January 2, 2021
Deferred Taxes
Allowance for doubtful accounts	$	505	$	1,228
Compensation	7,306		7,187
Inventory differences	3,138		2,725
Stock-based compensation	7,890		8,494
Accrued post-retirement benefit obligations	5,713		6,676
Vacation accrual	3,201		2,896
Warranty accrual	4,401		4,185
Tax loss and tax credit carryforwards	10,197		9,338
Capital loss carryforward	2,104		2,012
Lease liability	23,429		16,392
Payroll deferral	2,056		4,114
Other – net	8,000		7,491
Total deferred tax assets	$	77,940	$	72,738
Deferred income	(5,049)		(4,743)
Goodwill and other intangible assets	(49,744)		(48,934)
Prepaid expenses	(6,481)		(6,454)
Right of use asset	(23,109)		(16,626)
Tax over book depreciation	(56,582)		(58,556)
Total deferred tax liabilities	$	(140,965)	$	(135,313)
Valuation allowance	(11,303)		(11,524)
Total net deferred tax liabilities	$	(74,328)	$	(74,099)
Long-term net deferred tax assets	680		607
Long-term net deferred tax liabilities	(75,008)		(74,706)
Total net deferred tax liabilities	$	(74,328)	$	(74,099)

The valuation allowance, which primarily relates to foreign deferred tax assets, is as follows (in thousands):

	Balance at beginning of period		Charged to expenses		Adjustments to balance sheet		Balance at end of period
Year ended January 1, 2022	$	11,524	$	(221)	$	—	$	11,303
Year ended January 2, 2021	$	10,260	$	1,264	$	—	$	11,524
Year ended December 28, 2019	$	7,153	$	98	$	3,009	$	10,260

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2021		2020
Balance at beginning of period	$	2,227	$	2,578
Increases in positions taken in a prior period	81		53
New positions taken in a current period	568		364
Decrease due to lapse of statute of limitations	(681)		(768)
Balance at end of period	$	2,195	$	2,227

As of January 1, 2022, it is reasonably possible the amount of unrecognized tax benefits may increase or decrease within the twelve months following the reporting date.  These increases or decreases in the unrecognized tax benefits would be due to new

positions that may be taken on income tax returns, settlement of tax positions, and the closing of statutes of limitation.  It is not expected any of the changes will be material individually, or in total, to the results or financial position of the Corporation.

The Corporation recognizes interest related to unrecognized tax benefits in interest expense, and penalties in operating expenses, consistent with the recognition of these items in prior reporting periods.  The expenses and liabilities recorded for interest and penalties as of and for the years ended January 1, 2022 and January 2, 2021 are immaterial.

Tax years 2018 through 2020 remain open for examination by the Internal Revenue Service ("IRS"). Tax years 2016 through 2020, and 2015 through 2020 remain open for examination in various state and foreign jurisdictions, respectively. The Corporation is not currently under federal examination. The Corporation is currently under examination in certain states in which the outcome is expected to be immaterial.