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Income Taxes | 6 Months Ended
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Jun. 29, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Effective in 2018, the Tax Cuts and Jobs Act (“Tax Act”) reduced U.S. federal tax from 35% to 21% and created new taxes on certain foreign-source earnings (referred to as “GILTI”) and certain related-party payments. The Company recorded reasonable estimates as provisional amounts arising from the Tax Act in the fourth quarter of fiscal 2017. As of the second quarter of fiscal 2018, the Company has not made material adjustments with regard to the 2017 provisional amounts. The Company will continue to perform additional analysis regarding historical foreign earnings and taxes as well as other necessary potential adjustments and will complete the analysis by incorporating ongoing legislative guidance and accounting interpretations. Additionally, the Company has not yet determined its policy election as to whether it will recognize deferred taxes for basis differences expected to reverse as GILTI or whether GILTI will be accounted for as a period cost. The Company expects to complete its analysis for the tax effects of the Tax Act in fiscal 2018. For the second quarter of fiscal 2018, the Company’s effective income tax rate was 19%, compared to 26% in the corresponding period in fiscal 2017, primarily due to the reduced U.S. federal tax rate of approximately nine percentage points, increased tax benefit from stock based compensation and other discrete items of approximately three percentage points, partially offset by U.S. tax on certain foreign earnings of five percentage points related mainly to a provisional GILTI tax. For the first two quarters of fiscal 2018, the Company’s effective income tax rate was 16% as compared to 24% in the corresponding period in fiscal 2017, primarily due to the reduced U.S. federal tax rate of approximately nine percentage points, tax benefit from foreign deferred tax adjustments and other discrete items of approximately four percentage points, partially offset by U.S. tax on certain foreign earnings of five percentage points related mainly to a provisional GILTI tax. The Company's effective tax rate is lower than the newly enacted U.S. federal statutory rate of 21% primarily due to favorable tax rates associated with certain earnings from operations in lower-tax jurisdictions, a benefit from U.S. federal R&D credit and stock based compensation deductions. The Company and its subsidiaries are subject to U.S. federal and state and foreign income tax. The Company is currently in different stages of multiple year examinations by the Internal Revenue Service (the "IRS") as well as various state and foreign taxing authorities. In addition, as discussed below, the Company has a pending matter in U.S. tax court regarding fiscal 2011. The Company believes its reserves are more likely than not to be adequate to cover final resolution of all open tax matters. In the first quarter of fiscal 2015, the Company received a Notice of Proposed Adjustment from the IRS for the fiscal years 2010 and 2011. The proposed adjustments primarily relate to the valuations of intercompany transfers of acquired intellectual property. The assessments of tax and penalties for the years in question total $67.0 million. In January 2018, the Company and IRS reached agreement to settle certain aspects of the assessments constituting $15.8 million of the total $67.0 million assessment. The Company paid approximately $5.0 million in March 2018 in accordance with the agreement. The Company’s reserves were adequate to cover the partial agreement. On March 7, 2018 the Company received a Notice of Deficiency for fiscal year 2011, assessing tax and penalties totaling $51.2 million. The Company does not agree with the IRS position on the remaining issues. Accordingly, on June 1, 2018, the Company filed a petition with the U.S. tax court relating to the Notice of Deficiency. Although timing of the resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease (whether by payment, release or a combination of both) in the next 12 months by up to $8.0 million primarily related to the IRS partial settlement discussed above. Unrecognized tax benefits of $81.0 million and $68.5 million as of the end of the second quarter of fiscal 2018 and fiscal year end 2017, respectively, if recognized, would favorably affect the effective income tax rate in future periods. Unrecognized tax benefits are recorded in Other non-current liabilities and in the deferred tax accounts in the accompanying Condensed Consolidated Balance Sheets. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of the end of the second quarter of fiscal 2018 and fiscal year end 2017, the Company had accrued $14.5 million and $12.7 million, respectively, for interest and penalties, which are recorded in Other non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.

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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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