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INCOME TAXES | 12 Months Ended
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Dec. 29, 2018
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
| 2018 |  | 2017 |  | 2016
| (in thousands)
Income from continuing operations before income taxes: |  |  |  |  |  |
U.S. | $ | 95,062 |  |  | $ | 123,896 |  |  | $ | 59,255 |
Non-U.S. | 186,619 |  |  | 173,059 |  |  | 163,666 |
| $ | 281,681 |  |  | $ | 296,955 |  |  | $ | 222,921 |
Income tax provision (benefit): |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal | $ | 17,390 |  |  | $ | 93,871 |  |  | $ | 18,592 |
Foreign | 38,557 |  |  | 37,150 |  |  | 39,829 |
State | 8,837 |  |  | 12,361 |  |  | 5,263 |
Total current | 64,784 |  |  | 143,382 |  |  | 63,684 |
Deferred: |  |  |  |  |  |
Federal | (7,145 | ) |  | 9,416 |  |  | 7,206 |
Foreign | (4,104 | ) |  | 14,953 |  |  | (4,024 | )
State | 928 |  |  | 3,618 |  |  | (31 | )
Total deferred | (10,321 | ) |  | 27,987 |  |  | 3,151 |
| $ | 54,463 |  |  | $ | 171,369 |  |  | $ | 66,835 |
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) requiring companies to pay a one-time transition tax (Transition Tax) on certain unrepatriated earnings of foreign subsidiaries; (iii) generally eliminating U.S federal income taxes on dividends from foreign subsidiaries; (iv) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (v) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; (vi) subjecting certain foreign earnings to U.S. taxation through base erosion anti-abuse tax (BEAT) and global intangible low-taxed income (GILTI); (vii) creating a new limitation on deductible interest expense; (viii) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017, and (ix) modifying the officer’s compensation limitation. The Company’s accounting for the elements of U.S. Tax Reform is complete. The Company recorded measurement period adjustments under SAB 118 in fiscal year 2018 to the provisional amounts recorded in the fourth quarter of fiscal year 2017. These adjustments included a $1.0 million tax benefit relating to a decreased Transition Tax liability compared to the $73.5 million obligation reported in fiscal year 2017, and a $2.2 million tax benefit compared to the $18.2 million of tax recorded in fiscal year 2017 related to the Company’s unremitted foreign earnings. Additionally, the Company recorded a $2.3 million tax benefit for additional decreases to the net deferred tax liability relating to the reduction on the U.S. federal statutory tax rate from 35% to 21%. In fiscal year 2018, the Company made an accounting policy election to treat taxes due on the GILTI inclusion as a current period expense. 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 withdrew its indefinite reinvestment assertion for all of its unremitted foreign earnings. The components of deferred tax assets and liabilities are as follows:
| December 29, 2018 |  | December 30, 2017
| (in thousands)
Deferred tax assets: |  |  |
Compensation | $ | 36,724 |  |  | $ | 40,788 |
Accruals and reserves | 13,183 |  |  | 8,248 |
Inventory reserves and valuations | 2,482 |  |  | 2,135 |
Net operating loss and credit carryforwards | 35,679 |  |  | 33,160 |
Other | 2,578 |  |  | 7,661 |
Valuation allowance | (9,788 | ) |  | (10,591 | )
Total deferred tax assets | 80,858 |  |  | 81,401 |
Deferred tax liabilities: |  |  |
Goodwill and other intangibles | (154,743 | ) |  | (89,636 | )
Financing related | (898 | ) |  | (429 | )
Depreciation related | (19,373 | ) |  | (23,763 | )
Venture capital investments | (10,557 | ) |  | (7,796 | )
Tax on unremitted earnings | (14,140 | ) |  | (19,204 | )
Other | (1,398 | ) |  | (7,459 | )
Total deferred tax liabilities | (201,109 | ) |  | (148,287 | )
Net deferred taxes | $ | (120,251 | ) |  | $ | (66,886 | )
The changes recorded to the Company’s valuation allowance were insignificant in fiscal years 2018, 2017, and 2016. Reconciliations of the statutory U.S. federal income tax rate to effective tax rates are as follows:
| Fiscal Year
| 2018 |  | 2017 |  | 2016
U.S. statutory income tax rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign tax rate differences | 0.5 |  |  | (6.8 | ) |  | (10.3 | )
State income taxes, net of federal tax benefit | 2.4 |  |  | 2.0 |  |  | 1.6 |
Research tax credits and enhanced deductions | (2.9 | ) |  | (2.4 | ) |  | (3.5 | )
Stock-based compensation | (2.1 | ) |  | (3.2 | ) |  | — |
Enacted tax rate changes | (0.1 | ) |  | (4.2 | ) |  | (0.8 | )
Transition Tax | (0.3 | ) |  | 24.8 |  |  | — |
Impact of tax uncertainties | (1.1 | ) |  | (0.4 | ) |  | 0.2 |
Tax on unremitted earnings | 1.2 |  |  | 7.3 |  |  | 2.0 |
GILTI, net of foreign tax credits | 1.1 |  |  | — |  |  | — |
Foreign-Derived Intangible Income (FDII) | (1.4 | ) |  | — |  |  | — |
Impact of acquisitions and restructuring | 0.3 |  |  | 3.8 |  |  | 1.8 |
Other | 0.7 |  |  | 1.8 |  |  | 4.0 |
Effective income tax rate | 19.3 | % |  | 57.7 | % |  | 30.0 | %
GILTI, net of foreign tax credits includes $12.8 million of tax related to the GILTI inclusion, net of a $9.6 million foreign tax credit. FDII includes a $4.0 million tax benefit for the FDII deduction. As of December 29, 2018, the Company had foreign net operating loss and tax credit carryforwards of $35.7 million, as compared to $33.2 million as of December 30, 2017. Of this amount, $2.9 million will expire beginning in 2019, $18.2 million will begin to expire in 2030 and beyond, and the remainder of $14.6 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 $15.9 million in credit carryforwards, which will begin to expire in 2036. 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 decreased by $0.8 million from $10.6 million as of December 30, 2017 to $9.8 million as of December 29, 2018. A reconciliation of the Company’s beginning and ending unrecognized income tax benefits is as follows:
| Fiscal Year
| 2018 |  | 2017 |  | 2016
| (in thousands)
Beginning balance | $ | 24,710 |  |  | $ | 24,186 |  |  | $ | 23,338 |
Additions to tax positions for current year | 2,477 |  |  | 1,791 |  |  | 2,194 |
Additions to tax positions for prior years | — |  |  | 1,428 |  |  | 2,035 |
Reductions to tax positions for prior years | (4,543 | ) |  | — |  |  | (1,866 | )
Settlements | (3,380 | ) |  | (1,754 | ) |  | (918 | )
Expiration of statute of limitations | (437 | ) |  | (941 | ) |  | (597 | )
Ending balance | $ | 18,827 |  |  | $ | 24,710 |  |  | $ | 24,186 |
The $5.9 million decrease in unrecognized income tax benefits during fiscal year 2018 is primarily attributable to audit settlements, favorable tax authority rulings, and favorable foreign exchange movement, partially offset by an additional year of Canadian SR&ED credit. The amount of unrecognized income tax benefits that, if recognized, would favorably impact the effective tax rate was $17.6 million as of December 29, 2018 and $22.7 million as of December 30, 2017. The $5.1 million decrease is primarily attributable to favorable tax rulings and audit settlements during the year ended December 29, 2018. It is reasonably possible as of December 29, 2018 that the liability for unrecognized tax benefits for the uncertain tax position will decrease by $7.6 million over the next twelve month period, primarily as a result of lapsing statutes of limitations. 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 29, 2018 and December 30, 2017 was $2.7 million and $2.5 million, respectively. The total amount of accrued penalties related to unrecognized income tax benefits as of December 30, 2017 was $0.3 million and none as of December 29, 2018. 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 2015. The Company and certain of its subsidiaries have ongoing tax controversies in the U.S. and Canada. The Company does not anticipate resolution of these audits will have a material impact on its financial statements.

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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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