v3.25.4
Income Taxes
 12 Months Ended
Jan. 03, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before provision for income taxes are as follows:
(In thousands)January 3, 2026December 28, 2024December 30, 2023
Domestic$55,000 $51,417 $57,810 
Foreign88,585 101,653 101,206 
 $143,585 $153,070 $159,016 
The components of the provision for income taxes are as follows:
(In thousands)January 3, 2026December 28, 2024December 30, 2023
Current Provision
Federal$7,572 $7,051 $12,402 
Foreign26,770 29,414 28,587 
State3,114 2,819 3,170 
 37,456 39,284 44,159 
Deferred Provision (Benefit)   
Federal3,194 2,094 48 
Foreign(1,738)(1,222)(2,594)
State992 360 597 
 2,448 1,232 (1,949)
 $39,904 $40,516 $42,210 
The provision for income taxes in the accompanying consolidated statement of income differs from the provision calculated by applying the U.S. federal statutory income tax rate of 21% to income before provision for income taxes in 2025 due to the following:
 
January 3, 2026
(In thousands)
 
Amount
Percent
U.S. Federal Statutory Tax Rate $30,153 21.0%
State and Local Income Tax, Net of Federal Benefit (a)
 
3,244 2.3%
Foreign Tax Effects
 
Canada
 
Statutory tax rate difference between Canada and United States
 
(2,317)(1.6%)
State and local income tax
 
4,522 3.1%
Withholding tax
 
1,668 1.2%
Other
(32)—%
China
 
1,879 1.3%
Other Foreign Jurisdictions
 
1,571 1.1%
Effect of Cross-Border Tax Laws
 
Other
 
345 0.2%
Tax Credits
 
Foreign Tax Credit
 
(2,352)(1.6%)
Other
 
(445)(0.3%)
Changes in Valuation Allowances
 
22 —%
Nontaxable or Nondeductible Items
 
Nondeductible Compensation
 
1,657 1.1%
Other
708 0.5%
Changes in Unrecognized Tax Benefits(293)(0.2%)
Other Adjustments
Other
(426)(0.3%)
$39,904 27.8%
(a) State taxes in Mississippi, Oregon, Wisconsin, Alabama, and California made up the majority (greater than 50 percent) of the tax effect in this category.

The provision for income taxes in the accompanying consolidated statement of income differs from the provision calculated by applying the U.S. federal statutory income tax rate of 21% to income before provision for income taxes in 2024 and 2023 due to the following:
(In thousands)December 28, 2024December 30, 2023
Provision for Income Taxes at Statutory Rate$32,145 $33,393 
Increases (Decreases) Resulting From:  
Foreign tax rate differential7,697 5,070 
State income taxes, net of federal income tax2,512 2,965 
Nondeductible expenses1,731 1,730 
U.S. tax (benefit) cost of foreign earnings(1,379)1,270 
(Reversal of) provision for tax benefit reserves, net(65)386 
Research and development tax credits(503)(520)
Excess tax benefit related to stock-based compensation(401)(276)
Change in valuation allowance(203)(684)
Other(1,018)(1,124)
 $40,516 $42,210 

Cash paid for income taxes, net of refunds, by jurisdiction in 2025 is as follows:
(In thousands)
January 3, 2026
U.S. Federal
$8,805 
State
Other
3,337 
Foreign
Canada
16,148 
China
4,473 
Finland
3,201 
Brazil
2,225 
Other
5,952 
$44,141 
Cash paid for income taxes, net of refunds, was $42,291,000 in 2024 and $47,519,000 in 2023.
The Company's net deferred tax liability consists of the following:
(In thousands)January 3, 2026December 28, 2024
Deferred Tax Asset
Net operating loss carryforwards$11,148 $9,623 
Lease liabilities10,541 9,094 
Inventory basis difference6,107 5,589 
Employee compensation5,737 5,196 
Interest expense disallowance4,257 — 
Capitalized research expenses3,847 4,682 
Reserves and accruals3,515 3,125 
Allowance for credit losses953 822 
Foreign, state, and alternative minimum tax credit carryforwards756 344 
Other67 153 
Deferred tax asset, gross46,928 38,628 
Less: valuation allowance(8,739)(7,570)
Deferred tax asset, net38,189 31,058 
Deferred Tax Liability  
Goodwill and intangible assets(66,809)(44,027)
Fixed asset basis difference(16,645)(13,372)
ROU assets(10,118)(8,754)
Provision for unremitted foreign earnings(1,555)(1,135)
Other(2,530)(2,919)
Deferred tax liability(97,657)(70,207)
Net deferred tax liability$(59,468)$(39,149)

Deferred tax assets and liabilities are presented in the accompanying consolidated balance sheet within other assets and deferred income taxes on a net basis by tax jurisdiction. The Company has established valuation allowances related to certain domestic and foreign deferred tax assets on deductible temporary differences, tax losses, and tax credit carryforwards. The valuation allowance at year-end 2025 was $8,739,000, consisting of $81,000 in the United States and $8,658,000 in foreign jurisdictions. The increase in the valuation allowance in 2025 of $1,169,000 is related primarily to fluctuations in foreign currency exchange rates and an increase in the valuation allowance against certain deferred tax assets in a jurisdiction where it is not more likely than not that a related tax benefit will be realized in future periods. This increase in the valuation allowance is partially offset by a decrease related to a tax rate change. Compliance with ASC 740 requires the Company to periodically evaluate the necessity of establishing or adjusting a valuation allowance for deferred tax assets depending on whether it is more likely than not that a related tax benefit will be realized in future periods. When assessing the need for a valuation allowance in a tax jurisdiction, the Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As part of this evaluation, the Company considers its cumulative three-year history of earnings before income taxes, taxable income in prior carryback years, future reversals of existing taxable temporary differences, prudent and feasible tax planning strategies, and expected future results of operations. As of year-end 2025, the Company maintained a valuation allowance predominantly in certain foreign jurisdictions due to the uncertainty of future profitability in those foreign jurisdictions.
At year-end 2025, the Company had U.S. federal and state net operating loss carryforwards of $6,753,000 and $7,523,000, respectively, and foreign net operating loss carryforwards of $42,447,000. Of the U.S. federal net operating loss carryforwards, $442,000 expires in 2037 and the remainder do not expire. The state net operating loss carryforwards begin to expire in 2026 and a portion does not expire. Of the foreign net operating loss carryforwards, $3,040,000 will expire in the years 2029 through 2045, and the remainder do not expire. The Company also had a carryforward of disallowed business interest expense of $18,428,000 from its acquisition of Clyde Industries in 2025, which does not expire, and a foreign tax credit carryforward of $668,000, which begins to expire in 2034. The utilization of these tax attributes is limited to the Company's future taxable income, and certain of these tax attributes are subject to an annual limitation as a result of the acquisition of Clyde Industries, which constitutes a change of ownership as defined under Internal Revenue Service Code Section 382.
At year-end 2025, the Company had $150,894,000 of unremitted foreign earnings. The Company intends to repatriate the distributable reserves of select foreign subsidiaries back to the United States and has recognized $583,000 of tax expense on the estimated repatriation amount during 2025. Except for these select foreign subsidiaries, the Company intends to indefinitely reinvest $93,084,000 of earnings of its foreign subsidiaries in order to support the current and future capital needs of their operations, including the repayment of the Company’s foreign debt. The related foreign withholding taxes, which would be required if the Company were to remit these foreign earnings to the United States, would be $2,899,000.
The Company operates within multiple tax jurisdictions and could be subject to audit in those jurisdictions. Such audits can involve complex income tax issues, which may require an extended period of time to resolve and may cover multiple years. In management's opinion, adequate provisions for income taxes have been made for all years subject to audit.
As of year-end 2025, the Company had a liability of $14,147,000 for unrecognized tax benefits of which $6,547,000, if recognized, would reduce the effective tax rate. A reconciliation of unrecognized tax benefits is as follows:
(In thousands)January 3, 2026December 28, 2024
Unrecognized Tax Benefits, Beginning of Year$14,510 $11,212 
Gross Increases – Tax Positions in Prior Periods1,101 80 
Gross Increases – Tax Positions in Prior Periods Arising from Acquisitions (a)77 4,372 
Gross Decreases – Tax Positions in Prior Periods(49)(25)
Gross Increases – Current-Period Tax Positions1,248 931 
Settlements— (85)
Lapses of Statutes of Limitations(3,136)(1,624)
Currency Translation396 (351)
Unrecognized Tax Benefits, End of Year$14,147 $14,510 
(a) No indemnification assets were recorded in 2025 and $4,372,000 were recorded in 2024.

A portion of the unrecognized tax benefits generated in 2025 is offset by deferred tax assets in the accompanying consolidated balance sheet. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company has accrued $3,130,000 at year-end 2025 and $3,488,000 at year-end 2024 for the potential payment of interest and penalties. The interest and penalties included in the accompanying consolidated statement of income was a benefit of $412,000 in 2025 and an expense of $131,000 in 2024.
The Company is currently under audit in certain of its foreign tax jurisdictions. The Company remains subject to U.S. federal income tax examinations for the tax years 2019 through 2025, and to non-U.S. income tax examinations for the tax years 2015 through 2025. In addition, the Company remains subject to state and local income tax examinations in the United States for the tax years 2006 through 2025.