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Income Taxes | 12 Months Ended
--- | ---
Dec. 28, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income before taxes and the provision (benefit) for taxes consisted of the following:
Fiscal Years | 2018 |  | 2017 |  | 2016
|  |  | *As Adjusted |  | *As Adjusted
(In millions) |  |  |  |  |
Income before taxes: |  |  |  |  |
United States | $ | 25.4 |  |  | $ | 33.2 |  |  | $ | 65.5 |
Foreign | 252.6 |  |  | 215.0 |  |  | 110.6 |
Total | $ | 278.0 |  |  | $ | 248.2 |  |  | $ | 176.1 |
Provision (benefit) for taxes: |  |  |  |  |
US Federal: |  |  |  |  |
Current | $ | (19.7 | ) |  | $ | 98.6 |  |  | $ | 34.0 |
Deferred | (25.8 | ) |  | (6.1 | ) |  | (15.4 | )
| (45.5 | ) |  | 92.5 |  |  | 18.6 |
US State: |  |  |  |  |
Current | 5.0 |  |  | 4.5 |  |  | 3.6 |
Deferred | (3.6 | ) |  | (1.0 | ) |  | 0.5 |
| 1.4 |  |  | 3.5 |  |  | 4.1 |
Foreign: |  |  |  |  |
Current | 57.0 |  |  | 42.7 |  |  | 28.8 |
Deferred | (18.2 | ) |  | (9.0 | ) |  | (7.6 | )
| 38.8 |  |  | 33.7 |  |  | 21.2 |
Income tax provision (benefit) | $ | (5.3 | ) |  | $ | 129.7 |  |  | $ | 43.9 |
Effective tax rate | (2 | )% |  | 52 | % |  | 25 | %
* See Note 2 for a summary of adjustments The difference between the tax provision (benefit) at the statutory federal income tax rate and the tax provision (benefit) as a percentage of income before taxes ("effective tax rate") was as follows:
Fiscal Years | 2018 |  | 2017 |  | 2016
|  |  | *As Adjusted |  | *As Adjusted
Statutory federal income tax rate | 21 | % |  | 35 | % |  | 35 | %
Increase (reduction) in tax rate resulting from: |  |  |  |  |
Foreign income taxed at different rates | (7 | )% |  | (15 | )% |  | (10 | )%
US State income taxes | 1 | % |  | 1 | % |  | 2 | %
US Federal research and development credits | (4 | )% |  | (3 | )% |  | (3 | )%
Stock-based compensation | 1 | % |  | 2 | % |  | 3 | %
Excess tax benefit related to stock-based compensation | (3 | )% |  | (4 | )% |  | — | %
Effect of U.S. tax law change | (8 | )% |  | 33 | % |  | — | %
Other US taxes on foreign operations | 2 | % |  | — | % |  | — | %
Tax reserve releases | (9 | )% |  | — | % |  | — | %
Divestiture | — | % |  | — | % |  | (5 | )%
Other | 4 | % |  | 3 | % |  | 3 | %
Effective tax rate | (2 | )% |  | 52 | % |  | 25 | %
* See Note 2 for a summary of adjustments The 2017 Tax Cuts and Jobs Act (the "Tax Act") reduced U.S. federal tax rate from 35% to 21%, imposed a one-time transition tax on accumulated foreign earnings and created new taxes on certain foreign-sourced earnings (referred to as “GILTI”). As a result, the Company recorded reasonable estimates as provisional amounts during the previous quarters, including a provisional net income tax expense of $80.2 million recorded in the fourth quarter of 2017. In the fourth quarter of 2018, the Company completed the accounting for the tax effects of the Tax Act and made immaterial adjustments to the provisional amounts recorded previously. Additionally, in the fourth quarter of 2018, the Company finalized its accounting policy election to record GILTI deferred taxes and recorded a $15.1 million one-time tax benefit. The effective income tax rates in fiscal 2018 decreased compared to 2017 primarily due to the one-time impacts from the Tax Act, benefits from reserve releases due to the expiration of the U.S. federal statute of limitations for certain tax years, and a one-time benefit from deferred taxes in relation to GILTI. The effective tax rate in fiscal 2017 increased compared to 2016 primarily due to the one-time impacts from the Tax Act and a tax benefit from a divestiture of a non-strategic business in 2016, partially offset by a favorable change in the geographic mix of pretax income and stock-based compensation tax benefits. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are as follows:
At the End of Fiscal Year | 2018 |  | 2017
|  |  | *As Adjusted
(In millions) |  |  |
Deferred tax liabilities: |  |  |
Purchased intangibles | $ | 166.0 |  |  | $ | 69.8 |
Depreciation and amortization | 5.2 |  |  | 13.1 |
Deferred revenue | — |  |  | 1.3 |
Other | 9.5 |  |  | 8.4 |
Total deferred tax liabilities | 180.7 |  |  | 92.6 |
Deferred tax assets: |  |  |
Expenses not currently deductible | 33.4 |  |  | 24.7 |
U.S. tax credit carryforwards | 30.3 |  |  | 21.9 |
U.S. net operating loss carryforwards | 20.8 |  |  | 6.4 |
Foreign net operating loss carryforwards | 16.9 |  |  | 20.2 |
Stock-based compensation | 20.3 |  |  | 21.4 |
Global Intangible Low-Taxed Income | 13.4 |  |  | — |
Deferred revenue | 3.6 |  |  | — |
Other | 8.2 |  |  | (4.4 | )
Total deferred tax assets | 146.9 |  |  | 90.2 |
Valuation allowance | (27.8 | ) |  | (25.2 | )
Total deferred tax assets | 119.1 |  |  | 65.0 |
Total net deferred tax liabilities | $ | (61.6 | ) |  | $ | (27.6 | )
Reported as: |  |  |
Non-current deferred income tax assets | 12.2 |  |  | 20.2 |
Non-current deferred income tax liabilities | (73.8 | ) |  | (47.8 | )
Net deferred tax liabilities | $ | (61.6 | ) |  | $ | (27.6 | )
* See Note 2 for a summary of adjustments At the end of fiscal 2018, the Company has federal and foreign net operating loss carryforwards, or NOLs, of approximately $86.8 million and $83.8 million, respectively. The federal NOLs will begin to expire in 2021. There is, generally, no expiration for the foreign NOLs. Utilization of the Company’s federal and state NOLs is subject to annual limitations in accordance with the applicable tax code. The Company has determined that it is more likely than not that the Company will not realize a portion of the foreign NOLs and, accordingly, a valuation allowance has been established for such amount. The Company has Federal and California research and development credit carryforwards after federal tax benefit of approximately $6.0 million and $22.4 million, respectively. The federal tax credit carryforwards will expire beginning 2026. The California research tax credits have an indefinite carryforward period. The Company believes that it is more likely than not that the Company will not realize a portion of the California research and development credit carryforwards and, accordingly, a valuation allowance has been established for such amount. As a result of the Tax Act, the Company can repatriate foreign earnings back to the U.S. when needed with minimal U.S. income tax consequences, other than the transition tax. The Company reinvested a large portion of its undistributed foreign earnings in acquisitions and other investments and intends to bring back a portion of foreign cash which was subject to the transition tax and GILTI. During fiscal 2018, the Company repatriated $609.3 million of its foreign earning to the U.S. The total amount of the unrecognized tax benefits at the end of fiscal 2018 was $69.1 million. A reconciliation of gross unrecognized tax benefit is as follows:
Fiscal Years | 2018 |  | 2017 |  | 2016
(In millions) |  |  |  |  |
Beginning gross balance | $ | 82.4 |  |  | $ | 72.9 |  |  | $ | 59.0 |
Increase (decrease) related to prior years' tax positions | 4.5 |  |  | (0.6 | ) |  | 7.5 |
Increase related to current year tax positions | 10.0 |  |  | 12.1 |  |  | 9.9 |
Lapse of statute of limitations | (18.9 | ) |  | (1.6 | ) |  | (1.4 | )
Settlement with taxing authorities | (8.9 | ) |  | (0.4 | ) |  | (2.1 | )
Ending gross balance | $ | 69.1 |  |  | $ | 82.4 |  |  | $ | 72.9 |
The Company's total unrecognized tax benefits that, if recognized, would affect its effective tax rate were $60.5 million and $68.5 million at the end of fiscal 2018 and 2017, respectively. The Company and its subsidiaries are subject to U.S. federal, state, and foreign income taxes. The Company's tax years are substantially closed for all U.S. federal and state income taxes for audit purposes through 2014, except 2011 and 2012. Non-U.S. income tax matters have been concluded for years through 2007. The Company is currently in various stages of multiple year examinations by federal, state, and foreign (multiple jurisdictions) taxing authorities. While the Company generally believes it is more likely than not that its tax positions will be sustained, it is reasonably possible that future obligations related to these matters could arise. The Company believes that its reserves are adequate to cover any potential assessments that may result from the examinations and negotiations. 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 $8.6 million during 2018 to settle the $15.8 million assessment. The Company’s reserves were adequate to cover this agreement. On March 7, 2018 the Company received a formal Notice of Deficiency for fiscal year 2011, assessing tax and penalties totaling $51.2 million for the remainder of the assessment. The Company does not agree with the IRS position. Accordingly, on June 1, 2018, the Company filed a petition with the U.S. tax court relating to the Notice of Deficiency. On August 3, 2018, the IRS filed its response to the Company’s petition, with no changes to its position. Although timing of the resolution and/or closure of audits is not certain, the Company does not believe that its gross unrecognized tax benefits would materially change in the next twelve months. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company’s liability for unrecognized tax benefits including interest and penalties was recorded in Other non-current liabilities in the accompanying Consolidated Balance Sheets. At the end of fiscal 2018 and 2017, the Company had accrued $11.0 million and $12.7 million, respectively, for payment of interest and penalties.

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