Kontoor Brands, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Jan. 03, 2026

Schedule of Income Before Income Taxes for Which the Provision for Income Taxes was Computed

The following table presents income before income taxes used to calculate the provision for income taxes:


	Year Ended December

(In thousands)	2025		2024		2023
Domestic	$	104,272	$	153,220	$	128,026
Foreign	188,989		148,203		143,873
Income before income taxes	$	293,261	$	301,423	$	271,899

Schedule of Provision for Income Taxes

The following table presents components of the provision for income taxes:


	Year Ended December

(In thousands)	2025		2024		2023
Current:
Federal	$	11,748	$	44,248	$	26,290
Foreign	24,548		12,793		16,950
State	5,354		5,286		1,415
Total current income taxes	41,650		62,327		44,655
Deferred:
Federal and state	17,071		(6,838)		6,848
Foreign	12,499		132		(10,598)
Total deferred income taxes	29,570		(6,706)		(3,750)
Total provision for income taxes	$	71,220	$	55,621	$	40,905

Schedule of Differences Between Income Taxes Computed by Applying Statutory Federal Income Tax Rate and Income Tax Expense reported in Consolidated Financial Statements

A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate for the year ended December 2025 is as follows:


	Year Ended December 2025
(In thousands)	Total		%
Earnings from continuing operations, before income tax expense	$	293,261
U.S. Federal Statutory Tax Rate	61,585		21.0	%
State and Local Income Taxes1	3,586		1.2	%
Federal
Effect of Cross-Border Tax Laws
Global intangible low-taxed income, net of credits	4,659		1.6	%
Subpart F income, net of credits	4,606		1.6	%
Other foreign tax credits	(5,105)		(1.7)	%
Other	712		0.2	%
Nontaxable or Nondeductible Items
Employee Compensation	4,678		1.6	%
Transaction costs	3,039		1.0	%
Other	517		0.2	%
Tax Credits	(1,706)		(0.6)	%
Other Adjustments	(343)		(0.1)	%
Foreign Tax Effects
China
Changes in Valuation Allowances	4,177		1.4	%
Other	(773)		(0.3)	%
Hong Kong
Effect of Rates Different than Statutory	(3,213)		(1.1)	%
Statutorily exempt income	(8,344)		(2.8)	%
Nondeductible items	4,453		1.5	%
Panama
Effect of Rates Different than Statutory	(9,288)		(3.2)	%
Other Foreign Jurisdictions	9,366		3.2	%
Changes in Unrecognized Tax Benefits	(1,386)		(0.5)	%
Income Tax Expense	$	71,220	24.3	%

(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Texas, and Virginia for 2025.

The following table presents a reconciliation of the differences between income taxes computed by applying the statutory federal income tax rate and "income taxes" recorded in the Company's statements of operations for the years ended December 2024 and 2023, respectively:




(In thousands)	2024		2023
Tax at federal statutory rate	$	63,299	$	57,099
State income tax, net of federal tax benefit	3,677		2,614
Foreign rate differences	(22,860)		(20,354)

Employee compensation	2,169		1,216

Change in valuation allowance	3,165		(5,089)
Global intangible low-tax income ("GILTI")	8,674		5,518

Other	(2,503)		(99)
Income taxes	$	55,621	$	40,905

Schedule of Cash Flow, Supplemental Disclosures

he following table summarizes income taxes paid (net of refunds) exceeding 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:


	Year Ended December

(In thousands)	2025
U.S. Federal	$	33,000
U.S. States and Local	5,132
Foreign
Hong Kong	11,621
Switzerland	4,885
Mexico	4,457
Other	8,238
Total Foreign	29,201
Total income taxes paid (net of refunds)	$	67,333

Schedule of Deferred Income Tax Assets and Liabilities

The following table presents the components of "deferred income tax assets" and "deferred income tax liabilities" recorded in the Company's balance sheets:


(In thousands)	December 2025		December 2024
Deferred income tax assets:
Inventories	$	19,256	$	9,209
Deferred compensation	11,414		11,133
Other employee benefits	11,081		10,425
Stock-based compensation	5,307		3,837
Limited interest carryforwards	13,342		—
Other accrued expenses	25,113		9,750
Intangible assets	20,122		28,840
Leases	12,976		12,059
Operating loss carryforwards	52,171		33,275
Tax credit carryforwards	71,032		65,563
Gross deferred income tax assets	241,814		184,091
Less: valuation allowance	(128,686)		(82,565)
Net deferred income tax assets	113,128		101,526
Deferred income tax liabilities:
Leases	11,368		11,423
Depreciation	16,027		17,102
Intangible assets	101,729		—
Taxes on unremitted earnings	2,649		2,658
Deferred income tax liabilities	131,773		31,183
Total net deferred income tax assets (liabilities)	$	(18,645)	$	70,343
Amounts included in the balance sheets:
Deferred income tax assets	$	74,515	$	76,065
Deferred income tax liabilities	(93,160)		(5,722)
	$	(18,645)	$	70,343

Schedule of Unrecognized Tax Benefits Roll Forward

The following table presents a reconciliation of the change in the accrual for unrecognized income tax benefits:


(In thousands)	Unrecognized Income Tax Benefits		Accrued Interest and Penalties		Unrecognized Income Tax Benefits Including Interest and Penalties
Balance, December 2022	$	12,602	$	5,818	$	18,420
Additions for current year tax positions	248		—		248
Additions for prior year tax positions	79		931		1,010
Reductions for prior year tax positions	(345)		(140)		(485)
Reductions due to statute expirations	(2,249)		(296)		(2,545)


Balance, December 2023	10,335		6,313		16,648
Additions for current year tax positions	245		—		245
Additions for prior year tax positions	169		857		1,026

Reductions due to statute expirations	(1,775)		(888)		(2,663)



Balance, December 2024	8,974		6,282		15,256
Additions for current year tax positions	248		—		248
Additions for prior year tax positions	10		722		732
Additions for current year acquisitions	3,208		—		3,208
Reductions for prior year tax positions	(1,935)		(381)		(2,316)
Reductions due to statute expirations	23		8		31


Balance, December 2025	$	10,528	$	6,631	$	17,159

Schedule of Amounts Included in Consolidated Balance Sheets


(In thousands)	December 2025		December 2024
Amounts included in the balance sheets:
Unrecognized income tax benefits, including interest and penalties	$	17,159	$	15,256
Less: deferred tax benefits	(2,807)		(2,726)
Total unrecognized tax benefits	$	14,352	$	12,530