Income Taxes

12 Months Ended

Dec. 28, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Significant components of the provision for income taxes are as follows:

	2024		2023		2022
Current:
Federal	$	44.0	$	11.6	$	29.8
State	7.2		4.1		8.3
Foreign	1.9		0.9		0.3
Current provision	53.1		16.6		38.5
Deferred:
Federal	(12.0)		(2.0)		(13.1)
State	(1.3)		1.1		(2.8)
Foreign	0.0		(0.1)		0.0
Deferred provision	(13.2)		(1.0)		(15.9)
Total income tax expense	$	39.8	$	15.6	$	22.5

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

	2024		2023		2022
Federal statutory tax expense	$	37.7	$	13.6	$	30.7
State taxes, net of federal tax effect	6.0		3.7		5.6
Credit for research activities	(6.2)		(5.3)		(4.2)
Valuation allowance	0.3		(0.9)		(7.1)
Foreign taxes	1.2		0.7		0.7
Executive compensation limitation	3.0		1.7		1.4
Acquisition expenses	—		1.8		—
Sale of foreign subsidiary	—		—		(4.2)
Provision to return true-up	(1.7)		(0.8)		0.1
Other – net	(0.5)		1.1		(0.5)
Total income tax expense	$	39.8	$	15.6	$	22.5

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:

	December 28, 2024		December 30, 2023
Deferred Taxes
Allowance for doubtful accounts	$	0.8	$	1.3
Compensation	11.1		13.5
Stock-based compensation	5.6		8.5
Accrued post-retirement benefit obligations	4.1		4.5
Vacation accrual	0.0		2.1
Warranty accrual	4.6		5.2
Tax loss and tax credit carryforwards	8.8		9.1
Capital loss carryforward	0.8		3.3
Lease liability	37.1		35.0
Research and development capitalization	43.0		30.9
Other – net	2.8		3.8
Total deferred tax assets	$	118.8	$	117.2
Deferred income	(5.2)		(5.7)
Inventory differences	(4.7)		(3.8)
Goodwill and other intangible assets	(64.6)		(64.7)
Prepaid expenses	(8.1)		(7.7)
Right of use asset	(33.2)		(31.4)
Tax over book depreciation	(65.7)		(78.3)
Total deferred tax liabilities	$	(181.5)	$	(191.6)
Valuation allowance	(7.9)		(9.8)
Total net deferred tax liabilities	$	(70.6)	$	(84.2)
Long-term net deferred tax assets	1.1		0.9
Long-term net deferred tax liabilities	(71.6)		(85.1)
Total net deferred tax liabilities	$	(70.6)	$	(84.2)

The valuation allowance, which primarily relates to acquired deferred tax assets, is as follows:

	Balance at beginning of period		Expenses (benefits)		Impact of business combination		Balance at end of period
Year ended December 28, 2024	$	9.8	$	0.3	$	(2.2)	$	7.9
Year ended December 30, 2023	$	4.2	$	(0.9)	$	6.5	$	9.8
Year ended December 31, 2022	$	11.3	$	(7.1)	$	—	$	4.2

The net decrease in 2024 primarily relates to an adjustment to the amount of Kimball International capital loss carryforwards acquired, while the net increase in 2023 relates mainly to the acquisition of Kimball International state and foreign credits. The decrease in 2022 primarily relates to the sale of Lamex in July 2022.

As of December 28, 2024, the Corporation had $3.4 million of U.S. state tax credit carryforwards and $3.3 million of foreign net operating losses, which expire over the next twenty years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2024		2023
Balance at beginning of period	$	3.0	$	2.2
Changes in positions taken in a prior period	(0.0)		0.8
New positions taken in a current period	0.9		0.6
Decrease due to lapse of statute of limitations	(0.6)		(0.6)
Balance at end of period	$	3.3	$	3.0

As of December 28, 2024, 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 December 28, 2024 and December 30, 2023 are immaterial.

Tax years 2021 through 2023 remain open for examination by the Internal Revenue Service. Tax years 2020 through 2023 remain open for examination in various state and foreign jurisdictions, respectively. The Corporation is not currently under federal examination. The Corporation is currently under audit for a state examination.