XML 38 R20.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
U.S. and foreign income before income taxes are as follows (in thousands):
        
December 31, 2022January 1, 2022January 2, 2021
United States
$551,521 $545,861 $265,950 
Foreign342,197 275,535 87,669 
Income before income taxes$893,718 $821,396 $353,619 

Income tax expense attributable to income before income taxes consists of the following (in thousands):
         
December 31, 2022January 1, 2022January 2, 2021
Current:  
Federal
$(206)$(31)$(72)
State
2,288 8,442 1,595 
Foreign105,368 60,730 36,453 
Total current
107,450 69,141 37,976 
Deferred:  
Federal
35,290 66,883 20,827 
State
18,150 19,495 840 
Foreign
(14,264)8,587 (6,354)
Total deferred
39,176 94,965 15,313 
$146,626 $164,106 $53,289 

Income tax expense for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, differed from the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes as a result of the following (in thousands):
        
December 31, 2022January 1, 2022January 2, 2021
Computed "expected" tax expense$187,681 $172,493 $74,260 
Change in valuation allowance(3,241)(4,996)(522)
Non-deductible compensation expenses5,320 4,324 4,723 
Deferred tax on unremitted foreign earnings
4,939 3,415 (548)
Foreign rate differential17,628 14,748 7,077 
Change in uncertain tax positions8,167 6,809 (4,650)
State income taxes, net of federal benefit10,738 18,205 2,702 
Biofuel tax incentives(77,189)(38,778)(31,725)
Change in tax law(13)1,869 3,699 
Equity compensation windfall(13,441)(11,046)(2,897)
Other, net6,037 (2,937)1,170 
$146,626 $164,106 $53,289 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and January 1, 2022 are presented below (in thousands):
        
 December 31, 2022January 1, 2022
Deferred tax assets:  
Loss contingency reserves$11,775 $11,169 
Employee benefits14,480 13,059 
Pension liability3,505 8,208 
Interest expense carryforwards28,769 46 
Tax loss carryforwards275,675 123,194 
Tax credit carryforwards2,432 4,267 
Operating lease liabilities53,765 41,949 
Inventory15,002 8,533 
Accrued liabilities and other18,408 16,271 
Total gross deferred tax assets423,811 226,696 
Less valuation allowance(12,788)(17,685)
Net deferred tax assets411,023 209,011 
Deferred tax liabilities:
Intangible assets amortization, including taxable goodwill(238,347)(172,575)
Property, plant and equipment depreciation(218,316)(140,158)
Investment in DGD Joint Venture(344,633)(188,154)
Operating lease assets(52,330)(40,965)
Tax on unremitted foreign earnings(12,890)(10,379)
Other(8,451)(3,511)
Total gross deferred tax liabilities(874,967)(555,742)
Net deferred tax liability$(463,944)$(346,731)
Amounts reported on Consolidated Balance Sheets:
Non-current deferred tax asset$17,888 $16,211 
Non-current deferred tax liability(481,832)(362,942)
Net deferred tax liability$(463,944)$(346,731)
     
At December 31, 2022, the Company had net operating loss carryforwards for federal income tax purposes of approximately $1,054.0 million, $14.5 million of which expire in 2036 and $1,039.5 million of which can be carried forward indefinitely. The Company had a capital loss carry forward for federal income tax purposes of approximately $21.1 million, which expires in 2023 and can only be used in future years in which the Company recognizes capital gains. The Company had interest expense carryforwards of approximately $100.5 million and $63.2 million for federal and state income tax purposes, which may be carried forward indefinitely. The Company had approximately $319.8 million of net operating loss carryforwards for state income tax purposes, $215.9 million of which expire in 2023 through 2042 and $103.9 million of which can be carried forward indefinitely. The Company had foreign net operating loss carryforwards of approximately $122.9 million, $20.4 million of which expire in 2023 through 2038 and $102.5 million of which can be carried forward indefinitely. Also at December 31, 2022, the Company had U.S. federal and state tax credit carryforwards of approximately $0.8 million, and tax credit carryforwards with respect to its foreign tax jurisdictions of approximately $1.6 million. As of December 31, 2022, the Company had a valuation allowance of $4.8 million due to uncertainties in respect to its ability to utilize its U.S. (federal and state) net operating loss, capital loss and tax credit carryforwards. The Company also had a valuation allowance of $8.0 million due to uncertainties in its ability to utilize foreign net operating loss carryforwards and other foreign deferred tax assets.

At December 31, 2022, the Company had unrecognized tax benefits of approximately $17.8 million. All of the unrecognized tax benefits would favorably impact the Company's effective tax rate if recognized. The Company believes it is reasonably possible that unrecognized tax benefits could change by $0.1 million in the next twelve months. The possible change in unrecognized tax benefits relates to expiration of certain statutes of limitation. The Company recognizes accrued interest and penalties, as appropriate, related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2022, interest and penalties related to unrecognized tax benefits were $1.3 million.

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

December 31, 2022January 1, 2022
Balance at beginning of Year$10,508 $5,039 
Change in tax positions related to current year7,904 5,940 
Change in tax positions related to prior years(38)(471)
Change in tax positions due to settlement with tax authorities— — 
Expiration of the Statute of Limitations(532)— 
Balance at end of year$17,842 $10,508 

In fiscal 2022, the Company's major taxing jurisdictions are U.S. (federal and state), Belgium, Brazil, Canada, China, France, Germany and the Netherlands. The Company is subject to regular examination by various tax authorities. Although the final outcome of these examinations is not yet determinable, the Company does not anticipate that any of the examinations will have a significant impact on the Company's results of operations or financial position. The statute of limitations for the Company's major jurisdictions is open for varying periods, but is generally closed through the 2013 tax year.

The Company expects to have access to its offshore earnings with minimal to no additional U.S. tax impact. Therefore, the Company does not consider these earnings to be permanently reinvested offshore. As of December 31, 2022, a deferred tax liability of approximately $12.9 million has been recorded for any incremental taxes, including foreign withholding taxes, that are estimated to be incurred when those earnings are distributed to the U.S. in future years.

On August 16, 2022 the U.S. government enacted the IR Act that includes a new 15% alternative minimum tax based upon financial statement income (“book minimum tax”), a 1% excise tax on stock buybacks and tax incentives for energy and climate initiatives, among other provisions. The provisions of the IR Act are generally effective for periods after December 31, 2022 with no immediate impact to our income tax provision or net deferred tax assets. We do not currently expect the new book minimum tax and/or excise tax on stock buybacks will have a material impact on our financial results. The blender tax credits, which are refundable excise tax credits,
have been extended 2 years through December 31, 2024. After 2024, the CFPC, a non-refundable income tax credit, becomes effective from 2025 through 2027. We are currently assessing these tax incentives, which could materially change our pre-tax or after-tax amounts and impact our tax rate in future years. We will continue to evaluate the applicability and effect of the IR Act as more guidance is issued.