XML 30 R16.htm IDEA: XBRL DOCUMENT
v3.8.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income from continuing operations before income taxes and the related provision for income taxes are presented below:
| Fiscal Year
| 2017 |  | 2016 |  | 2015
| (in thousands)
Income from continuing operations before income taxes: |  |  |  |  |  |
U.S. | $ | 123,896 |  |  | $ | 59,255 |  |  | $ | 76,157 |
Non-U.S. | 173,059 |  |  | 163,666 |  |  | 119,271 |
| $ | 296,955 |  |  | $ | 222,921 |  |  | $ | 195,428 |
Income tax provision: |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal | $ | 93,871 |  |  | $ | 18,592 |  |  | $ | 23,687 |
Foreign | 37,150 |  |  | 39,829 |  |  | 8,572 |
State | 12,361 |  |  | 5,263 |  |  | 6,819 |
Total current | 143,382 |  |  | 63,684 |  |  | 39,078 |
Deferred: |  |  |  |  |  |
Federal | 9,416 |  |  | 7,206 |  |  | 1,790 |
Foreign | 14,953 |  |  | (4,024 | ) |  | 3,064 |
State | 3,618 |  |  | (31 | ) |  | (541 | )
Total deferred | 27,987 |  |  | 3,151 |  |  | 4,313 |
| $ | 171,369 |  |  | $ | 66,835 |  |  | $ | 43,391 |
U. S. Tax Reform U.S. Tax Reform, which was signed into law on December 22, 2017, has resulted in significant changes including, but not limited to, (i) reducing the U.S. federal statutory tax rate from 35% to 21%; (ii) transitioning to a modified territorial system through a one-time transition tax on previously unrepatriated foreign earnings; (iii) subjecting certain foreign earnings to U.S. taxation through base erosion anti-abuse tax (BEAT) and global intangible low-taxed income (GILTI); (iv) creating a new limitation on deductible interest expense; and (v) modifying the officer’s compensation limitation. The Company’s accounting for the elements of U.S. Tax Reform is incomplete. However, the Securities Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of U.S. Tax Reform to finalize the recording of the related tax impacts. The Company has made reasonable estimates of the effects to the consolidated statements of income and consolidated balance sheets and have, therefore, recorded provisional amounts. Provisional amounts recorded as of December 30, 2017 are subject to refinement due to various factors including, but not limited to changes in interpretations, analysis and assumptions made by the Company, additional guidance that may be issued by the U.S. Department of the Treasury and the Internal Revenue Service, and any updates or changes to estimates the Company has utilized to calculate the transition impact. The Company currently anticipates finalizing and recording any resulting adjustments by the end of its fiscal year ending December 29, 2018. Transition Tax The Transition Tax is imposed on previously untaxed accumulated and current earnings and profits of certain of the Company’s foreign subsidiaries. The Company has recorded a provisional Transition Tax obligation of $73.5 million. However, the Company is continuing to gather additional information to more precisely compute the amount of the Transition Tax. Deferred Tax and Other Effects U.S. Tax Reform reduces the U.S. federal statutory tax rate to 21%, effective December 31, 2017. The Company has recorded a provisional decrease to its net deferred tax liability in the U.S of $13.2 million, with a corresponding net adjustment to deferred income tax benefit for the year ended December 30, 2017. The Company is continuing to assess the impacts of GILTI and has not yet made an accounting policy election with regard to providing deferred taxes for future GILTI tax expense, or accounting for GILTI as a current period cost. Prior to the fourth quarter of fiscal 2017, the Company asserted that the unremitted earnings of its foreign subsidiaries were deemed indefinitely reinvested as they were required to fund needs outside of the U.S. As a result of the Transition Tax and other effects of U.S. Tax Reform enacted during the fourth quarter of fiscal 2017, the Company has withdrawn its indefinite reinvestment assertion for all of its unremitted foreign earnings and has provisionally provided deferred taxes of $18.2 million for future withholding and state income taxes which would be incurred upon the repatriation of the balance of unremitted foreign earnings as of December 30, 2017. In light of the reduced incremental tax cost of repatriating unremitted foreign earnings, as well as other effects of U.S. Tax Reform, the Company has determined it can no longer overcome the presumption that all undistributed foreign earnings will ultimately be transferred to the U.S. parent entity. The components of deferred tax assets and liabilities are as follows:
| December 30, 2017 |  | December 31, 2016
| (in thousands)
Deferred tax assets: |  |  |
Compensation | $ | 40,788 |  |  | $ | 70,863 |
Accruals and reserves | 8,248 |  |  | 8,103 |
Inventory reserves and valuations | 2,135 |  |  | 3,447 |
Net operating loss and credit carryforwards | 33,160 |  |  | 58,081 |
Other | 7,661 |  |  | 8,141 |
Valuation allowance | (10,591 | ) |  | (10,101 | )
Total deferred tax assets | 81,401 |  |  | 138,534 |
Deferred tax liabilities: |  |  |
Goodwill and other intangibles | (89,636 | ) |  | (121,256 | )
Financing related | (429 | ) |  | (854 | )
Depreciation related | (23,763 | ) |  | (32,271 | )
Venture capital investments | (7,796 | ) |  | (5,084 | )
Tax on unremitted earnings | (19,204 | ) |  | (821 | )
Other | (7,459 | ) |  | (5,220 | )
Total deferred tax liabilities | (148,287 | ) |  | (165,506 | )
Net deferred taxes | $ | (66,886 | ) |  | $ | (26,972 | )
Reconciliations of the statutory U.S. federal income tax rate to effective tax rates are as follows:
| Fiscal Year
| 2017 |  | 2016 |  | 2015
U.S. statutory income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign tax rate differences | (6.8 | )% |  | (10.3 | )% |  | (8.6 | )%
State income taxes, net of federal tax benefit | 2.0 | % |  | 1.6 | % |  | 1.9 | %
Research tax credits and enhanced deductions | (2.4 | )% |  | (3.5 | )% |  | (2.6 | )%
Stock-based compensation | (3.2 | )% |  | — | % |  | — | %
Enacted tax rate changes | (4.2 | )% |  | (0.8 | )% |  | (1.5 | )%
Transition Tax | 24.8 | % |  | — | % |  | — | %
Impact of tax uncertainties | (0.4 | )% |  | 0.2 | % |  | (5.2 | )%
Tax on unremitted earnings | 7.3 | % |  | 2.0 | % |  | 3.4 | %
Impact of acquisitions and restructuring | 3.8 | % |  | 1.8 | % |  | (2.0 | )%
Other | 1.8 | % |  | 4.0 | % |  | 1.8 | %
Effective income tax rate | 57.7 | % |  | 30.0 | % |  | 22.2 | %
In the above reconciliation, stock-based compensation reflects $11.0 million of excess tax benefits from current year tax deductions for stock-based compensation that has been recorded as a component of income tax expense pursuant to the adoption of ASU 2016-09. In prior years, these excess tax benefits were recorded to additional paid-in capital within the consolidated balance sheets. Enacted tax rate changes reflects a tax benefit of $12.7 million relating primarily to U.S. Tax Reform as well as statutory rate changes in France and the U.K. U.S. Transition Tax reflects an estimated $73.5 million of U.S. federal and state taxes as part of the deemed repatriation of unremitted earnings under U.S. Tax Reform. Tax on unremitted earnings reflects an estimated $21.6 million, which includes both the $18.2 million of withholding tax and state taxes accrued as result of the change in the Company’s assertion regarding the indefinite reinvestment of unremitted foreign earnings; and $3.4 million of withholding taxes as a result of the Company’s previous change in assertion related to Canada and China. The Impact of acquisitions and restructuring reflects $11.4 million primarily related to the sale of the CDMO business. As of December 30, 2017, the Company had foreign net operating loss and tax credit carryforwards of $33.2 million, as compared to $58.5 million as of December 31, 2016. Of this amount, $5.9 million will expire beginning after 2017, $16.4 million will begin to expire in 2029 and beyond, and the remainder of $10.9 million can be carried forward indefinitely. In accordance with Canadian federal tax law, the Company claims Scientific Research and Experimental Development (SR&ED) credits on qualified research and development costs incurred in its Safety Assessment facility in Montreal, and currently maintains $16.4 million in credit carryforwards, which will begin to expire in 2033. Additionally, the Company records a benefit to operating income for research and development credits in both Quebec and the U.K. related to its Safety Assessment and Early Discovery facilities. The Company has fully recognized its deferred tax assets on the belief that it is more likely than not that they will be realized. The only exceptions relate to deferred tax assets primarily for net operating losses in France, Hong Kong, Luxembourg, the Netherlands and Germany, capital losses in the U.S., and fixed assets in the U.K. The valuation allowance increased by $0.5 million from $10.1 million as of December 31, 2016 to $10.6 million as of December 30, 2017. A reconciliation of the Company’s beginning and ending unrecognized income tax benefits is as follows:
| Fiscal Year
| 2017 |  | 2016 |  | 2015
| (in thousands)
Beginning balance | $ | 24,186 |  |  | $ | 23,338 |  |  | $ | 34,627 |
Additions to tax positions for current year | 1,791 |  |  | 2,194 |  |  | 2,362 |
Additions to tax positions for prior years | 1,428 |  |  | 2,035 |  |  | 3,028 |
Reductions to tax positions for prior years | — |  |  | (1,866 | ) |  | (3,991 | )
Settlements | (1,754 | ) |  | (918 | ) |  | (1,946 | )
Expiration of statute of limitations | (941 | ) |  | (597 | ) |  | (10,742 | )
Ending balance | $ | 24,710 |  |  | $ | 24,186 |  |  | $ | 23,338 |
The $0.5 million increase in unrecognized income tax benefits during fiscal year 2017 is primarily attributable to an additional year of Canadian SR&ED credit, offset by the settlement of competent authority proceedings, and unfavorable foreign exchange movement. The amount of unrecognized income tax benefits that, if recognized, would favorably impact the effective tax rate was $22.7 million as of December 30, 2017 and $21.4 million as of December 31, 2016. The $1.3 million increase is primarily attributable to an additional year of Canadian SR&ED credit and unfavorable foreign exchange movement. It is reasonably possible as of December 30, 2017 that the liability for unrecognized tax benefits for the uncertain tax position will decrease by $1.0 million over the next twelve month period, primarily as a result of the outcome of a pending tax ruling. The Company continues to recognize interest and penalties related to unrecognized income tax benefits in income tax expense. The total amount of accrued interest related to unrecognized income tax benefits as of December 30, 2017 and December 31, 2016 was $2.5 million and $1.7 million, respectively. The total amount of accrued penalties related to unrecognized income tax benefits as of December 30, 2017 and December 31, 2016 was $0.3 million and $0.2 million, respectively. The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, Japan, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2014. The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, Germany, and France. The Company does not anticipate resolution of these audits will have a material impact on its financial statements.

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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration