Income Taxes

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

U.S. and foreign income before income taxes are as follows (in thousands):

	December 30, 2023		December 31, 2022		January 1, 2022
United States	$	399,378	$	551,521	$	545,861
Foreign	320,579		342,197		275,535
Income before income taxes	$	719,957	$	893,718	$	821,396

Income tax expense attributable to income before income taxes consists of the following (in thousands):

	December 30, 2023		December 31, 2022		January 1, 2022
Current:
Federal	$	1,574	$	(206)	$	(31)
State	1,336		2,288		8,442
Foreign	104,997		105,368		60,730
Total current	107,907		107,450		69,141
Deferred:
Federal	(22,868)		35,290		66,883
State	(28,511)		18,150		19,495
Foreign	3,040		(14,264)		8,587
Total deferred	(48,339)		39,176		94,965
	$	59,568	$	146,626	$	164,106

Income tax expense for the years ended December 30, 2023, December 31, 2022 and January 1, 2022, 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 30, 2023		December 31, 2022		January 1, 2022
Computed "expected" tax expense	$	151,191	$	187,681	$	172,493
Change in valuation allowance	27,713		(3,241)		(4,996)
Non-deductible compensation expenses	5,779		5,320		4,324
Deferred tax on unremitted foreign earnings	3,686		4,939		3,415
Foreign rate differential	16,607		17,628		14,748
Change in uncertain tax positions	(3,477)		8,167		6,809
State income taxes, net of federal benefit	(20,868)		10,738		18,205
Biofuel tax incentives	(125,006)		(77,189)		(38,778)
Global intangible low taxed income	14,943		5,745		1,549
Change in tax law	(5,890)		(13)		1,869
Equity compensation windfall	(2,241)		(13,441)		(11,046)
Other, net	(2,869)		292		(4,486)
	$	59,568	$	146,626	$	164,106

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 30, 2023 and December 31, 2022 are presented below (in thousands):

	December 30, 2023		December 31, 2022
Deferred tax assets:
Loss contingency reserves	$	15,247	$	11,775
Employee benefits	15,466		14,480
Pension liability	3,193		3,505
Interest expense carryforwards	53,591		28,769
Tax loss carryforwards	291,910		275,675
Tax credit carryforwards	2,051		2,432
Operating lease liabilities	57,503		53,765
Inventory	17,013		15,002
Accrued liabilities and other	23,090		18,408
Total gross deferred tax assets	479,064		423,811
Less valuation allowance	(40,063)		(12,788)
Net deferred tax assets	439,001		411,023
Deferred tax liabilities:
Intangible assets amortization, including taxable goodwill	(248,146)		(238,347)
Property, plant and equipment depreciation	(242,666)		(218,316)
Investment in DGD Joint Venture	(324,583)		(344,633)
Operating lease assets	(56,098)		(52,330)
Tax on unremitted foreign earnings	(18,139)		(12,890)
Other	(29,832)		(8,451)
Total gross deferred tax liabilities	(919,464)		(874,967)
Net deferred tax liability	$	(480,463)	$	(463,944)
Amounts reported on Consolidated Balance Sheets:
Non-current deferred tax asset	$	17,711	$	17,888
Non-current deferred tax liability	(498,174)		(481,832)
Net deferred tax liability	$	(480,463)	$	(463,944)

At December 30, 2023, the Company had net operating loss carryforwards for federal income tax purposes of approximately $979.3 million which can be carried forward indefinitely. The Company had interest expense carryforwards of approximately $230.9 million and $98.4 million for federal and state income tax purposes, which may be carried forward indefinitely. The Company had approximately $358.6 million of net operating loss carryforwards for state income tax purposes, $259.2 million of which expire in 2024 through 2043 and $99.4 million of which can be carried forward indefinitely. The Company had foreign net operating loss carryforwards of approximately $213.0 million, $23.9 million of which expire in 2024 through 2038 and $189.1 million of which can be carried forward indefinitely. Also at December 30, 2023, the Company had U.S. federal and state tax credit carryforwards of approximately $2.0 million. As of December 30, 2023, the Company also had a valuation allowance of $40.1 million due to uncertainties in its ability to utilize foreign net operating loss carryforwards and other foreign deferred tax assets.

At December 30, 2023, the Company had unrecognized tax benefits of approximately $13.9 million. All of the unrecognized tax benefits would favorably impact the Company’s effective tax rate if recognized. The Company does not believe that unrecognized tax benefits will change in the next twelve months. The Company recognizes accrued interest and penalties, as appropriate, related to unrecognized tax benefits as a component of income tax expense. As of December 30, 2023, interest and penalties related to unrecognized tax benefits were $1.7 million.

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

	December 30, 2023		December 31, 2022
Balance at beginning of Year	$	17,842	$	10,508
Change in tax positions related to current year	(1,883)		7,904
Change in tax positions related to prior years	(1,986)		(38)
Change in tax positions due to settlement with tax authorities	—		—
Expiration of the Statute of Limitations	(101)		(532)
Balance at end of year	$	13,872	$	17,842

In fiscal 2023, 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 30, 2023, a deferred tax liability of approximately $18.1 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 through December 31, 2024. After 2024, the CFPC, a transferable 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.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate income tax of 15% for companies with global revenues above certain thresholds (referred to as Pillar 2) that has been agreed upon in principle by over 140 countries. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted Pillar 2 legislation or are in the process of introducing legislation to implement Pillar 2. Although the framework provides model rules for applying the minimum tax, countries may enact Pillar 2 differently than the model rules and on different timelines and may adjust their domestic tax incentives in response to Pillar 2. The Company does not expect Pillar 2 to have a material impact in 2024; however, we are evaluating the potential consequences of Pillar 2 on our longer-term financial position.