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Income Taxes | 12 Months Ended
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Nov. 29, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company's income tax (benefit) expense was $(62.6) million, $82.6 million and $214.8 million and the Company's effective income tax rate was 33.0%, 17.3% and 43.0% for the years ended November 29, 2020, November 24, 2019 and November 25, 2018, respectively. On March 27, 2020, the CARES Act was signed into law in the United States. The CARES Act provides relief to U.S. Corporations through financial assistance programs and modifications to certain income tax provisions including temporary five-year net operating loss carryback provisions and a modification of interest deduction limitations. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Tax Act"), which significantly changed U.S. tax law. The Tax Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective on November 26, 2018. Beginning the first quarter of 2019, the Company's effective tax rate reflected a provision to tax Global Intangible Low-Taxed Income ("GILTI") of foreign subsidiaries and a tax benefit for Foreign Derived Intangible Income ("FDII"). In fiscal year 2020, no GILTI tax cost and FDII tax benefit reflected in the income tax benefit due to COVID 19 and losses incurred in many jurisdictions. In accordance with U.S. GAAP, the Company made an accounting policy election to account for the GILTI provision in the period in which it is incurred. The increase in the effective tax rate in fiscal year 2020 as compared to fiscal year 2019 was driven by a significant decrease in income before income taxes and tax rate reconciling items as a percentage to income before income taxes. The increase in the effective tax rate was primarily attributable to a $26.1 million benefit from stock-based compensation exercises which includes state income taxes, and a $4.6 million benefit resulting from the carryback of U.S. net operating losses to tax years with a higher federal income tax rate as allowed under the CARES Act, offset with a $18.3 million tax charge for valuation allowance against deferred tax assets. The decrease in the effective tax rate in fiscal year 2019 as compared to fiscal year 2018 was driven by a $143.4 million one-time tax charge in 2018 related to the enactment of the Tax Act. Included in the charge was $95.6 million related to re-measurement of deferred tax assets and liabilities, $37.5 million from a one-time U.S. transition tax on undistributed foreign earnings, and $10.3 million related to foreign and state tax costs associated with future remittances of undistributed earnings from foreign subsidiaries. The Company's income tax (benefit) expense differed from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxes as follows:
| Year Ended
| November 29, 2020 |  | November 24, 2019 |  | November 25, 2018
| (Dollars in thousands)
Income tax expense at U.S. federal statutory rate | $ | (39,855) |  | 21.0 | % |  | $ | 100,293 |  | 21.0 | % |  | $ | 111,755 |  | 22.4 | %
State income taxes, net of U.S. federal impact | (5,246) |  | 2.8 | % |  | 4,496 |  | 1.0 | % |  | 11,102 |  | 2.2 | %
Change in valuation allowance | 18,271 |  | (9.6) | % |  | (81) |  | — | % |  | (9,239) |  | (1.9) | %
Impact of foreign operations(1) | (8,868) |  | 4.7 | % |  | 7,132 |  | 1.5 | % |  | (17,149) |  | (3.4) | %
Foreign-derived intangible income benefit ("FDII") | — |  | — | % |  | (11,918) |  | (2.5) | % |  | — |  | — | %
Reassessment of tax liabilities | (1,531) |  | 0.7 | % |  | (6,480) |  | (1.4) | % |  | (12,552) |  | (2.5) | %
Stock-based compensation | (22,332) |  | 11.8 | % |  | (15,730) |  | (3.3) | % |  | (10,715) |  | (2.1) | %
Other, including non-deductible expenses | 1,547 |  | (0.8) | % |  | 4,892 |  | 1.0 | % |  | (1,783) |  | (0.4) | %
Change in tax law | (4,628) |  | 2.4 | % |  | — |  | — | % |  | 143,359 |  | 28.7 | %
Total | $ | (62,642) |  | 33.0 | % |  | $ | 82,604 |  | 17.3 | % |  | $ | 214,778 |  | 43.0 | %
___________ (1)Included in the Impact of foreign operations are foreign rates differential, GILTI and tax impact on actual and deemed repatriation of foreign earnings. Impact of foreign operations. The tax benefit in fiscal year 2020 is primarily due to a decrease in foreign earnings as compared to fiscal year 2019 which reduced the U.S. tax cost from GILTI and branch operations. The tax rate benefit in fiscal year 2019 decreased as compared to fiscal year 2018 is primarily due to additional tax charges from foreign jurisdictions, Tax Act impacts (e.g. GILTI) and a lesser amount of excess tax benefit on actual and deemed repatriation of foreign earnings. Change in valuation allowance. The $18.3 million tax charge in fiscal year 2020 is primarily due to net operating losses generated in the current year for which management concluded that it is more likely than not that such assets will not be realized. The $9.2 million tax benefit in fiscal year 2018 is primarily due to the release of valuation allowances on deferred tax assets of certain foreign subsidiaries, primarily in Japan where management concluded that it is more likely than not that such assets will be realized. Reassessment of tax liabilities. The $6.5 million tax benefit in fiscal year 2019 is primarily attributable to finalization of state tax refund claims. The $12.6 million tax benefit in fiscal year 2018 is primarily attributable to finalization of a foreign audit. Change in tax law. The $4.6 million tax benefit is comprised of a $38.5 million benefit for carrying back current year U.S. losses to prior years at a higher tax rate, partially offset by a $27.6 million write off of previously used foreign tax credits that will expire unutilized because of the aforementioned carryback. In addition, $6.3 million of foreign tax credits expired in 2020 due to the current year U.S. loss. The $143.4 million tax charge in 2018, from the enactment of the Tax Act, was comprised of a $95.6 million remeasurement of the Company's deferred tax assets and liabilities based on the lower rates at which they are expected to reverse in the future, a $37.5 million one-time U.S. transition tax on undistributed foreign earnings, and a $10.3 million charge related to foreign and state tax costs associated with the future remittance of undistributed earnings of foreign subsidiaries. The U.S. and foreign components of income before income taxes were as follows:
| Year Ended
| November 29, 2020 |  | November 24, 2019 |  | November 25, 2018
| (Dollars in thousands)
Domestic | $ | (197,718) |  |  | $ | 120,692 |  |  | $ | 151,229 |
Foreign | 7,935 |  |  | 356,892 |  |  | 348,793 |
Total income before income taxes | $ | (189,783) |  |  | $ | 477,584 |  |  | $ | 500,022 |
Income tax expense consisted of the following:
| Year Ended
| November 29, 2020 |  | November 24, 2019 |  | November 25, 2018
| (Dollars in thousands)
U.S. Federal |  |  |  |  |
Current | $ | 8,396 |  |  | $ | 13,182 |  |  | $ | 12,468 |
Deferred | (79,676) |  |  | (22,319) |  |  | 126,210 |
| $ | (71,280) |  |  | $ | (9,137) |  |  | $ | 138,678 |
U.S. State |  |  |  |  |
Current | $ | 978 |  |  | $ | (2,939) |  |  | $ | 6,447 |
Deferred | (6,435) |  |  | 1,002 |  |  | 4,655 |
| $ | (5,457) |  |  | $ | (1,937) |  |  | $ | 11,102 |
Foreign |  |  |  |  |
Current | $ | 23,228 |  |  | $ | 87,324 |  |  | $ | 61,605 |
Deferred | (9,133) |  |  | 6,354 |  |  | 3,393 |
| $ | 14,095 |  |  | $ | 93,678 |  |  | $ | 64,998 |
Consolidated |  |  |  |  |
Current | $ | 32,602 |  |  | $ | 97,567 |  |  | $ | 80,520 |
Deferred | (95,244) |  |  | (14,963) |  |  | 134,258 |
Total income tax expense | $ | (62,642) |  |  | $ | 82,604 |  |  | $ | 214,778 |
Deferred Tax Assets and Liabilities The Company's deferred tax assets and deferred tax liabilities were as follows:
| November 29, 2020 |  | November 24, 2019
| (Dollars in thousands)
Deferred tax assets |  |  |
Foreign tax credit carryforwards | $ | 232,164 |  |  | $ | 157,379 |
State net operating loss carryforwards | 16,054 |  |  | 10,070 |
Foreign net operating loss carryforwards | 58,644 |  |  | 45,047 |
Employee compensation and benefit plans | 102,846 |  |  | 141,489 |
Advance royalties | 10,021 |  |  | 15,213 |
Accrued liabilities | 32,304 |  |  | 24,648 |
Sales returns and allowances | 30,740 |  |  | 22,494 |
Inventory | 25,380 |  |  | 11,635 |
Property, plant and equipment | — |  |  | 12,266 |
Unrealized foreign exchange gains or losses | 18,665 |  |  | 5,527 |
Lease liability | 251,285 |  |  | — |
Other | 17,898 |  |  | 9,557 |
Total gross deferred tax assets | 796,001 |  |  | 455,325 |
Less: Valuation allowance | (38,543) |  |  | (19,611) |
Deferred tax assets, net of valuation allowance | 757,458 |  |  | 435,714 |
Deferred tax liabilities |  |  |
U.S. Branches | (25,330) |  |  | (27,134) |
Residual tax liability on unremitted foreign earnings | (7,940) |  |  | (5,672) |
Property, plant and equipment | (4,531) |  |  | — |
Right of use asset | (227,054) |  |  | — |
Total deferred tax liabilities | (264,855) |  |  | (32,806) |
Total net deferred tax assets | $ | 492,603 |  |  | $ | 402,908 |
Foreign tax credit carryforwards. The foreign tax credit carryforwards at November 29, 2020, are subject to expiration through 2030 if not utilized. Foreign net operating loss carryforwards. As of November 29, 2020, the Company had a deferred tax asset of $57.7 million for foreign net operating loss carryforwards of $227.8 million. Of these operating losses $103.8 million are subject to expiration through 2030. The remaining $124.0 million are available as indefinite carryforwards under applicable tax law. Valuation Allowance. The following table details the changes in valuation allowance during the year ended November 29, 2020:
| Valuation Allowance at November 24, 2019 |  | Changes in Related Gross Deferred Tax Asset |  | Change / (Release) |  | Valuation Allowance at November 29, 2020
| (Dollars in thousands)
Foreign tax credit and U.S. state net operating loss carryforwards | $ | 2,540 |  |  | $ | 5,508 |  |  | $ | — |  |  | $ | 8,048 |
Foreign net operating loss carryforwards and other foreign deferred tax assets | 17,071 |  |  | (4,847) |  |  | 18,271 |  |  | 30,495 |
| $ | 19,611 |  |  | $ | 661 |  |  | $ | 18,271 |  |  | $ | 38,543 |
At November 29, 2020, the Company's valuation allowance primarily related to its gross deferred tax assets for state and foreign net operating loss carryforwards which reduced such assets to the amount that will more likely than not be realized. Unremitted earnings of certain foreign subsidiaries. The Company historically provided for U.S. income taxes on the undistributed earnings of foreign subsidiaries unless they were considered indefinitely reinvested outside the United States. The Company reevaluated its historic indefinite reinvestment assertion as a result of the enactment of the Tax Act and determined that any historical undistributed earnings through November 25, 2018 of foreign subsidiaries, as well as most of the additional undistributed earnings generated through November 2020, are no longer considered to be indefinitely reinvested. The deferred tax liability related to foreign and state tax costs associated with the future remittance of these undistributed earnings of foreign subsidiaries was $8.2 million. Uncertain Income Tax Positions As of November 29, 2020, the Company’s total gross amount of unrecognized tax benefits was $32.3 million, of which $28.8 million could impact the effective tax rate, if recognized, as compared to November 24, 2019, when the Company’s total gross amount of unrecognized tax benefits was $36.6 million, of which $33.1 million could have impacted the effective tax rate, if recognized. The following table reflects the changes to the Company's unrecognized tax benefits for the year ended November 29, 2020 and November 24, 2019:
| November 29, 2020 |  | November 24, 2019
| (Dollars in thousands)
Unrecognized tax benefits beginning balance | $ | 36,559 |  |  | $ | 26,594 |
Increases related to current year tax positions | 1,575 |  |  | 2,432 |
Increases related to tax positions from prior years | 262 |  |  | 3,696 |
Decreases related to tax positions from prior years | (889) |  |  | (3,222) |
Settlement with tax authorities | (4,322) |  |  | 7,119 |
Lapses of statutes of limitation | (446) |  |  | (45) |
Other, including foreign currency translation | (453) |  |  | (15) |
Unrecognized tax benefits ending balance | $ | 32,286 |  |  | $ | 36,559 |
The Company evaluates all domestic and foreign audit issues and believes that it is reasonably possible that total gross unrecognized tax benefits could decrease by as much as $1.1 million within the next twelve months. As of November 29, 2020 and November 24, 2019, accrued interest and penalties primarily relating to non-U.S. jurisdictions were $1.2 million and $1.7 million, respectively. The Company files income tax returns in the United States and in various foreign (including Belgium, Hong Kong, India, Mexico and Russia), state and local jurisdictions. With few exceptions, examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through 2008.

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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 -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
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