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Note 12 - Income Taxes | 12 Months Ended
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Dec. 30, 2023
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 12 - Income Taxes We are subject to federal and state income tax as well as income tax in the various foreign jurisdictions in which we operate. The domestic and foreign components of Income before income taxes were as follows:
|  | Year Ended |
|  | December 30, |  |  | December 31, |  |  | January 1, |
(In thousands) |  | 2023 |  |  | 2022 |  |  | 2022 |
Domestic |  | $ | 55,069 |  |  | $ | 30,362 |  |  | $ | 24,003 |
Foreign |  |  | 159,787 |  |  |  | 151,750 |  |  |  | 73,623 |
Income before taxes |  | $ | 214,856 |  |  | $ | 182,112 |  |  | $ | 97,626 |
The components of Income tax (benefit) expense are as follows:
|  | Year Ended |
|  | December 30, |  |  | December 31, |  |  | January 1, |
(In thousands) |  | 2023 |  |  | 2022 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 10,331 |  |  | $ | 748 |  |  | $ | 445 |
State |  |  | 1,059 |  |  |  | 265 |  |  |  | 45 |
Foreign |  |  | 3,019 |  |  |  | 3,637 |  |  |  | 1,538 |
|  |  | 14,409 |  |  |  | 4,650 |  |  |  | 2,028 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (56,323 | ) |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | (2,291 | ) |  |  | (1,420 | ) |  |  | (324 | )
|  |  | (58,614 | ) |  |  | (1,420 | ) |  |  | (324 | )
Income tax (benefit) expense |  | $ | (44,205 | ) |  | $ | 3,230 |  |  | $ | 1,704 |
Income tax (benefit) expense differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:
|  | Year Ended
|  | December 30, |  | December 31, |  | January 1,
|  | 2023 |  | 2022 |  | 2022
|  | % |  | % |  | %
Statutory federal rate |  | 21 |  | 21 |  | 21
Adjustments for tax effects of: |  |  |  |  |  |
State taxes, net |  | (1) |  | (2) |  | (4)
Federal tax credits |  | (4) |  | (1) |  | (3)
Excess tax benefit from stock-based compensation |  | (2) |  | — |  | (8)
Foreign rate differential |  | (15) |  | (16) |  | (14)
U.S. tax on foreign operations |  | 9 |  | 33 |  | 3
Capital loss expiration |  | — |  | 1 |  | 3
Valuation allowance |  | (29) |  | (33) |  | 8
Change in uncertain tax benefit accrual |  | — |  | (2) |  | (5)
Other |  | — |  | 1 |  | 1
Effective income tax rate |  | (21) |  | 2 |  | 2
We updated our evaluation of the valuation allowance position in the United States through December 30, 2023. In making this evaluation, we considered our operating environment and estimates about our ability to generate taxable income in future periods within the United States. As a result of our consistent and continued profitability over the preceding three-year period and our expectations about generating sufficient U.S. Federal taxable income, we have determined that there is sufficient evidence that our U.S. Federal deferred tax assets are more likely than not to be realized. In the fourth quarter of fiscal 2023, we reduced the valuation allowance against a significant portion of our U.S. deferred tax assets resulting in the inclusion of $56.9 million of U.S. Federal deferred tax assets on our Consolidated Balance Sheets. We continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. We do not maintain a valuation allowance in any foreign jurisdictions as we have concluded it is more likely than not that we will realize those net deferred tax assets in future periods. The components of our net deferred tax assets and liabilities are as follows:
(In thousands) |  | December 30, 2023 |  |  | December 31, 2022 |
Deferred tax assets: |  |  |  |  |  |  |  |
Intangible assets |  | $ | 4,274 |  |  | $ | 6,264 |
Net operating loss carry forwards |  |  | 13,829 |  |  |  | 15,362 |
Tax credit carry forwards |  |  | 87,955 |  |  |  | 103,092 |
Accrued liabilities and reserves |  |  | 23,249 |  |  |  | 12,932 |
Stock-based and deferred compensation |  |  | 5,199 |  |  |  | 3,769 |
Other |  |  | 5,162 |  |  |  | 5,031 |
Total deferred tax assets |  |  | 139,668 |  |  |  | 146,450 |
Less: valuation allowance |  |  | (79,100 | ) |  |  | (140,533 | )
Net deferred tax assets |  |  | 60,568 |  |  |  | 5,917 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | 1,475 |  |  |  | 2,058 |
Unremitted earnings |  |  | 620 |  |  |  | 2,498 |
Other |  |  | 6,889 |  |  |  | 8,134 |
Total deferred tax liabilities |  |  | 8,984 |  |  |  | 12,690 |
Net deferred taxes |  | $ | 51,584 |  |  | $ | (6,773 | )
Reported as: |  |  |  |  |  |  |  |
Deferred tax assets |  | $ | 57,762 |  |  | $ | 1,022 |
Deferred tax liabilities (included in Other long-term liabilities) |  |  | (6,178 | ) |  |  | (7,795 | )
Net deferred taxes |  | $ | 51,584 |  |  | $ | (6,773 | )
The following table displays the activity related to changes in our valuation allowance for deferred tax assets:
Fiscal Years Ended |  | Balance at beginning |  |  | Charged (Credit) to costs and |  |  | Charged (credit) to other |  |  | Balance at end of |
(In thousands) |  | of period |  |  | expenses |  |  | accounts |  |  | period |
December 30, 2023 |  | $ | 140,533 |  |  | $ | (61,433 | ) |  | $ | — |  |  | $ | 79,100 |
December 31, 2022 |  | $ | 200,438 |  |  | $ | (59,905 | ) |  | $ | — |  |  | $ | 140,533 |
January 1, 2022 |  | $ | 192,478 |  |  | $ | 7,960 |  |  | $ | — |  |  | $ | 200,438 |
At December 30, 2023, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $8.0 million which will expire between 2027 and 2028. We had state NOL carryforwards (pretax) of approximately $134.5 million that substantially all expire at various dates from 2024 through 2041. We also had federal credit carryforwards of $45.0 million that expire at various dates from 2033 through 2043, and $78.9 million state credit carryforwards, of which substantially all do not expire. Future utilization of federal and state net operating losses and tax credit carry forwards may be limited if cumulative changes to ownership exceed 50% within any three-year period. However, if there is a significant change in ownership, future tax attribute utilization may be limited and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation. Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed. At December 30, 2023, U.S. income taxes and foreign withholding taxes were not provided for on a cumulative total of approximately $3.0 million of the undistributed earnings of our foreign subsidiaries. We intend to reinvest these earnings indefinitely. At December 30, 2023 and December 31, 2022, our unrecognized tax benefits associated with uncertain tax positions were $61.4 million and $58.9 million, respectively, of which $58.7 million and $56.3 million, respectively, if recognized, would affect the effective tax rate, subject to valuation allowance. As of December 30, 2023 and December 31, 2022, interest and penalties associated with unrecognized tax benefits were $11.3 million and $10.6 million, respectively, which are not reflected in the table below. We accrue interest and penalties related to uncertain tax positions in Income tax expense. The following table summarizes the changes to unrecognized tax benefits for the fiscal years presented:
|  | (In thousands) |
Balance at January 2, 2021 |  | $ | 55,737 |
Additions based on tax positions related to the current year |  |  | 1,156 |
Additions based on tax positions of prior years |  |  | 1,130 |
Additions due to acquisition |  |  | 977 |
Settlements |  |  | (51 | )
Reduction as a result of lapse of applicable statute of limitations |  |  | (2,718 | )
Balance at January 1, 2022 |  |  | 56,231 |
Additions based on tax positions related to the current year |  |  | 1,594 |
Additions based on tax positions of prior years |  |  | 2,798 |
Settlements |  |  | (148 | )
Reduction as a result of lapse of applicable statute of limitations |  |  | (1,586 | )
Balance at December 31, 2022 |  |  | 58,889 |
Additions based on tax positions related to the current year |  |  | 2,247 |
Additions based on tax positions of prior years |  |  | 1,128 |
Reductions for tax positions of prior years |  |  | (156 | )
Reduction as a result of lapse of applicable statute of limitations |  |  | (696 | )
Balance at December 30, 2023 |  | $ | 61,412 |
Our liability for uncertain tax positions (including penalties and interest) was $21.9 million and $21.6 million at December 30, 2023 and December 31, 2022, respectively, and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets. At December 30, 2023, it is reasonably possible that $0.3 million of unrecognized tax benefits and $0.1 million of associated interest and penalties could be recognized during the next twelve months. The years that remain subject to examination are 2017 for federal income taxes, 2019 for state income taxes, and 2017 for foreign income taxes, including years ending thereafter. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward amount.

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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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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