XML 30 R14.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 26, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 6. Income Taxes The Company’s income tax provision (benefit) consists of the following:
|  | Fiscal Year Ended |
|  | December 26, 2020 |  |  | December 28, 2019 |  |  | December 29, 2018 |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (25,220 | ) |  | $ | 32,874 |  |  | $ | 26,784 |
Deferred |  |  | (7,115 | ) |  |  | 20,388 |  |  |  | 13,249 |
|  | $ | (32,335 | ) |  | $ | 53,262 |  |  | $ | 40,033 |
State: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (3,931 | ) |  | $ | 12,605 |  |  | $ | 13,015 |
Deferred |  |  | 2,715 |  |  |  | 831 |  |  |  | (1,599 | )
|  | $ | (1,216 | ) |  | $ | 13,436 |  |  | $ | 11,416 |
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 133,622 |  |  | $ | 77,594 |  |  | $ | 53,625 |
Deferred |  |  | 11,015 |  |  |  | (109,556 | ) |  |  | 24,093 |
|  | $ | 144,637 |  |  | $ | (31,962 | ) |  | $ | 77,718 |
Total |  | $ | 111,086 |  |  | $ | 34,736 |  |  | $ | 129,167 |
The income tax provision differs from the amount computed by applying the U.S. statutory federal income tax rate to income before taxes. The sources and tax effects of the differences, including the impact of establishing tax contingency accruals, are as follows:
|  | Fiscal Year Ended |
|  | December 26, 2020 |  |  | December 28, 2019 |  |  | December 29, 2018 |
Federal income tax expense at U.S. statutory rate |  | $ | 231,718 |  |  | $ | 207,317 |  |  | $ | 172,882 |
State income tax (benefit) expense, net of federal tax effect |  |  | (3,404 | ) |  |  | 7,827 |  |  |  | 5,339 |
Foreign-Derived Intangible Income Deduction |  |  | — |  |  |  | (4,966 | ) |  |  | (4,666 | )
Foreign tax rate differential |  |  | (98,130 | ) |  |  | (57,302 | ) |  |  | (38,563 | )
Other foreign taxes less incentives and credits |  |  | 3,446 |  |  |  | 6,360 |  |  |  | (12,841 | )
Withholding Tax |  |  | 17,026 |  |  |  | 32,162 |  |  |  | 33,306 |
Net Change in Uncertain Tax Positions |  |  | (21,391 | ) |  |  | (17,259 | ) |  |  | (13,728 | )
Federal Research and Development Credit |  |  | (21,342 | ) |  |  | (19,338 | ) |  |  | (16,562 | )
Share Based Compensation |  |  | (6,114 | ) |  |  | (6,169 | ) |  |  | (2,747 | )
Switzerland Tax Reform |  |  | 11,016 |  |  |  | (117,989 | ) |  |  | — |
Other, net |  |  | (1,739 | ) |  |  | 4,093 |  |  |  | 6,747 |
Income tax expense (benefit) |  | $ | 111,086 |  |  | $ | 34,736 |  |  | $ | 129,167 |
The Company recorded income tax expense of $111,086 in the year ended December 26, 2020, which included a $14,308 income tax benefit recognized by the Company in the second quarter of 2020 due to the release of uncertain tax position reserves associated with a 2014 intercompany restructuring and was partially offset by income tax expense of $11,016 recognized by the Company in the fourth quarter of 2020 related to the revaluation of certain Switzerland tax assets related to the Switzerland tax reform transitional measures. The Company recorded income tax expense of $34,736 in the year ended December 28, 2019, which included an income tax benefit of $117,989 related to the revaluation and step-up of certain Switzerland tax assets as a result of the October 2019 enactment of Switzerland federal and Schaffhausen cantonal tax reform and related transitional measures. The Company’s statutory federal and cantonal income tax rate in Switzerland, the Company's place of incorporation, is 14.03%. If the Company reconciled taxes at the Swiss holding company federal statutory tax rate to the reported income tax expense for 2020 as presented above, the amounts related to tax at the statutory rate would be approximately $77,000 lower, or $155,000, and the foreign tax rate differential would be adjusted by a similar amount to approximately $20,000. The Company’s statutory federal income tax rate in Switzerland prior to 2020 was 7.83%. For 2019, the amounts related to tax at the statutory rate would be approximately $130,000 lower, or $77,000, and the foreign tax rate differential would be adjusted by a similar amount to approximately $73,000. For 2018, the amount related to tax at the statutory rate would be approximately $108,000 lower, or $65,000, and the foreign tax differential would be reduced by a similar amount to approximately $65,000. All other amounts would remain substantially unchanged. The Company’s income before income taxes attributable to non-U.S. operations was $1,059,074, $606,711, and $532,657, for the years ended December 26, 2020, December 28, 2019, and December 29, 2018, respectively. Income taxes of $47,236, $35,982, and $36,800 at December 26, 2020, December 28, 2019, and December 29, 2018, respectively, have not been accrued by the Company for the unremitted earnings of several of its foreign subsidiaries because such earnings are intended to be reinvested in the subsidiaries indefinitely. 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 Company’s deferred tax assets and liabilities are as follows:
|  | December 26, 2020 |  |  | December 28, 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Product warranty accruals |  | $ | 10,500 |  |  | $ | 2,652 |
Allowance for doubtful accounts |  |  | 4,874 |  |  |  | 3,981 |
Inventory reserves |  |  | 7,211 |  |  |  | 7,187 |
Sales program allowances |  |  | 1,289 |  |  |  | 1,185 |
Reserve for sales returns |  |  | 2,196 |  |  |  | 1,732 |
Accrued vacation |  |  | 11,438 |  |  |  | 9,079 |
Other accruals |  |  | 10,587 |  |  |  | 4,320 |
Share based compensation |  |  | 10,201 |  |  |  | 7,501 |
Tax credit carryforwards |  |  | 18,523 |  |  |  | 11,164 |
Intangible assets |  |  | 212,695 |  |  |  | 250,313 |
Net operating losses |  |  | 5,566 |  |  |  | 1,981 |
Benefit related to uncertain tax positions |  |  | 5,239 |  |  |  | 6,095 |
Operating leases |  |  | 15,578 |  |  |  | 12,711 |
Deferred revenue |  |  | 26,199 |  |  |  | — |
Other |  |  | 1,883 |  |  |  | 1,755 |
Valuation allowance related to loss carryforward and tax credits |  |  | (10,853 | ) |  |  | (4,562 | )
|  | $ | 333,126 |  |  | $ | 317,094 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | 37,359 |  |  |  | 33,754 |
Operating leases |  |  | 15,343 |  |  |  | 12,473 |
Prepaid and perpetual license assets |  |  | 22,166 |  |  |  | — |
Other prepaid expenses |  |  | 2,564 |  |  |  | 1,849 |
Capitalized preproduction design and development costs |  |  | 8,408 |  |  |  | — |
Book basis in excess of tax basis for acquired entities |  |  | 33,154 |  |  |  | 22,488 |
Withholding tax |  |  | 83,329 |  |  |  | 91,966 |
Deferred revenue |  |  | — |  |  |  | 800 |
Other |  |  | 2,192 |  |  |  | — |
|  | $ | 204,515 |  |  | $ | 163,330 |
Net deferred tax assets |  | $ | 128,611 |  |  | $ | 153,764 |
At December 26, 2020, the Company had $18,523 of tax credit carryover compared to $11,164 at December 28, 2019. At December 26, 2020, the Company had a deferred tax asset of $5,566 related to the future tax benefit of net operating loss (NOL) carryforwards of $29,025. Included in the NOL carryforwards is $16,980 that relates to Switzerland and expires in 2027, $4,990 that relates to Luxembourg and expires in 2037, $409 that relates to Finland and expires in varying amounts between 2025 and 2028, $607 that relates to the Netherlands and expires in 2026, $249 that relates to Thailand and expires in 2025, $54 that relates to Vietnam and expires in 2025, and $5,736 that relates to various other jurisdictions and has no expiration date. The Company has recorded a valuation allowance for a portion of its deferred tax asset relating to various tax attributes that it does not believe are more likely than not to be realized. In the future, if the Company determines, based on existence of sufficient evidence, that it should realize more or less of its deferred tax assets, an adjustment to the valuation allowance will be made in the period such a determination is made. The total amount of gross unrecognized tax benefits, as of December 26, 2020 was $84,985. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for years ended December 26, 2020, December 28, 2019, and December 29, 2018 is as follows:
|  | December 26, 2020 |  |  | December 28, 2019 |  |  | December 29, 2018 |
Balance beginning of year |  | $ | 101,251 |  |  | $ | 118,287 |  |  | $ | 130,798 |
Additions based on tax positions related to prior years |  |  | 10,480 |  |  |  | 398 |  |  |  | 1,138 |
Reductions based on tax positions related to prior years |  |  | (4,169 | ) |  |  | (6,556 | ) |  |  | (5,340 | )
Additions based on tax positions related to current period |  |  | 16,859 |  |  |  | 13,806 |  |  |  | 19,368 |
Reductions related to settlements with tax authorities |  |  | (935 | ) |  |  | (218 | ) |  |  | (527 | )
Expiration of statute of limitations |  |  | (38,501 | ) |  |  | (24,466 | ) |  |  | (27,150 | )
Balance at end of year |  | $ | 84,985 |  |  | $ | 101,251 |  |  | $ | 118,287 |
Accounting guidance requires unrecognized tax benefits to be classified as noncurrent liabilities, except for the portion that is expected to be paid within one year of the balance sheet date. The balance of net unrecognized benefits of $81,938, $92,056, and $114,682 are required to be classified as noncurrent at December 26, 2020, December 28, 2019, and December 29, 2018, respectively. The net unrecognized tax benefits, if recognized, would reduce the effective tax rate. None of the unrecognized tax benefits are due to uncertainty in the timing of deductibility. Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. At December 26, 2020, December 28, 2019, and December 29, 2018, the Company had accrued approximately $5,666, $7,636, and $6,613, respectively, for interest. The interest component of the reserve decreased income tax expense for the year ending December 26, 2020 by $1,970, and increased income tax expense for the years ending December 28, 2019, and December 29, 2018, by $1,023, and $1,008, respectively. The Company did not have significant amounts accrued for penalties for the years ending December 26, 2020, December 28, 2019, and December 29, 2018. The Company files income tax returns in Switzerland, U.S. federal jurisdiction, as well as various states, local, and foreign jurisdictions. In its major tax jurisdictions, Switzerland, Taiwan, United Kingdom, and U.S. federal and various states, the Company is no longer subject to income tax examinations by tax authorities, with few exceptions, for years prior to 2016, 2015, 2016, and 2017, respectively. The Company recognized a reduction of income tax expense of $42,185, $26,158, and $27,106 in fiscal years ended December 26, 2020, December 28, 2019, and December 29, 2018, respectively, to reflect the expiration of statutes of limitations and releases due to audit settlement in various jurisdictions. The Company believes that it is reasonably possible that approximately $5,000 to $25,000 of its reserves for certain unrecognized tax benefits will decrease within the next 12 months as the result of the expiration of statutes of limitations. This potential decrease in unrecognized tax benefits would impact the Company’s effective tax rate within the next 12 months.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration