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INCOME TAXES
 12 Months Ended
Dec. 26, 2020
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
 202020192018
(in thousands)
Income from continuing operations before income taxes:   
U.S. $226,935 $108,326 $95,062 
Non-U.S. 220,179 195,758 186,619 
Total income from continuing operations, before income taxes$447,114 $304,084 $281,681 
Income tax provision (benefit):   
Current:   
Federal$38,192 $18,101 $17,390 
Foreign35,410 43,489 38,557 
State6,623 9,915 8,837 
Total current80,225 71,505 64,784 
Deferred:   
Federal386 (3,226)(7,145)
Foreign5,583 (17,111)(4,104)
State(4,386)(1,145)928 
Total deferred1,583 (21,482)(10,321)
Total provision for income taxes$81,808 $50,023 $54,463 
Included in the fiscal year 2019 income tax expense of $50.0 million is a $20.6 million tax benefit for the recognition of $315.5 million of historical foreign net operating loss deferred tax assets, partially offset by a $294.9 million valuation allowance. Prior to 2019, these deferred tax assets were not recognized as the Company believed the ability to utilize the net operating losses was remote. As a result of both U.S. Tax Reform and European tax legislation, the Company made changes in 2019 to its financing structure, resulting in the ability to utilize a portion of the net operating losses previously considered remote in nature. 
Reconciliations of the statutory U.S. federal income tax rate to effective tax rates are as follows:
Fiscal Year
202020192018
U.S. statutory income tax rate21.0 %21.0 %21.0 %
Foreign tax rate differences1.2 2.7 0.5 
State income taxes, net of federal tax benefit0.4 2.6 2.4 
Non-deductible compensation1.0 1.7 1.0 
Research tax credits and enhanced deductions(3.4)(4.4)(2.9)
Stock-based compensation(2.7)(2.2)(2.1)
Impact of tax uncertainties(0.2)(2.6)(1.1)
Tax on unremitted earnings1.3 1.7 1.2 
Impact of acquisitions and restructuring0.5 2.7 0.3 
Net operating loss deferred tax asset recognition, net of valuation allowance (NOL DTA)(0.1)(6.8)— 
Other(0.7)0.1 (1.0)
Effective income tax rate18.3 %16.5 %19.3 %
The components of deferred tax assets and liabilities are as follows:
December 26, 2020December 28, 2019
(in thousands)
Deferred tax assets:
Compensation$32,118 $40,582 
Accruals and reserves17,970 13,687 
Net operating loss and credit carryforwards406,085 367,269 
Operating lease liability43,646 33,785 
Other4,253 7,181 
Valuation allowance(334,845)(309,962)
Total deferred tax assets169,227 152,542 
Deferred tax liabilities:
Goodwill and other intangibles(202,430)(174,847)
Depreciation related(33,277)(29,317)
Venture capital investments(32,848)(12,806)
Tax on unremitted earnings(27,707)(17,282)
Right-of-use assets(43,557)(34,953)
Other(8,710)(5,961)
Total deferred tax liabilities(348,529)(275,166)
Net deferred taxes$(179,302)$(122,624)
The valuation allowance increased by $24.9 million from $310.0 million as of December 28, 2019 to $334.8 million as of December 26, 2020. The increase is primarily a result of foreign exchange impact on net operating losses and corresponding valuation allowances relating to the Company’s 2019 financing structure changes. The valuation allowance increased by $300.2 million from $9.8 million as of December 29, 2018 to $310.0 million as of December 28, 2019. The increase is primarily related to the recognition of $315.5 million of net operating loss deferred tax assets due to changes in the Company’s financing structure, $294.9 million of which the Company does not believe is more likely than not to be utilized. The other changes recorded to the Company’s valuation allowance were immaterial in the fiscal years 2020, 2019, and 2018.
As of December 26, 2020, the Company had net operating loss carryforwards of $369.0 million, as compared to $337.3 million as of December 28, 2019. Of this amount, $27.7 million are definite-lived and begin to expire in 2021, and the remainder of $341.3 million can be carried forward indefinitely. The Company has tax credit carryforwards of $37.1 million, which will begin to expire after 2035 and beyond. Additionally, the Company records a benefit to operating income for research and development and other credits in Quebec, France, the Netherlands, and the U.K. related to its DSA facilities.
The Company has 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 Hong Kong, Luxembourg, Denmark, certain capital losses, and fixed assets in the U.K.
A reconciliation of the Company’s beginning and ending unrecognized income tax benefits is as follows:
Fiscal Year
202020192018
(in thousands)
Beginning balance$19,665 $18,827 $24,710 
Additions to tax positions for current year7,044 3,691 2,477 
Additions to tax positions for prior years4,589 5,234 — 
Reductions to tax positions for prior years(127)(1,033)(4,543)
Settlements(5,859)(274)(3,380)
Expiration of statute of limitations(342)(6,780)(437)
Ending balance$24,970 $19,665 $18,827 
The $5.3 million increase in unrecognized income tax benefits during fiscal year 2020 as compared to the corresponding period in 2019 is primarily attributable to amended U.S. state tax returns from prior years and an additional year of Canadian Scientific Research and Experimental Development (SR&ED) credit, partially offset by audit settlements.
The amount of unrecognized income tax benefits that, if recognized, would favorably impact the effective tax rate was $22.6 million as of December 26, 2020 and $17.0 million as of December 28, 2019. The $5.6 million increase is primarily due to the same items noted above. It is reasonably possible as of December 26, 2020 that the liability for unrecognized tax benefits for the uncertain tax position will decrease by approximately $2 million over the next twelve-month period. The Company continues to recognize interest and penalties related to unrecognized income tax benefits in income tax expense. The total amount of cumulative accrued interest related to unrecognized income tax benefits as of December 26, 2020 and December 28, 2019 was $2.4 million and $2.3 million, respectively. Interest expense recorded as a component of income taxes was immaterial for all periods. There were no accrued penalties related to unrecognized income tax benefits as of December 26, 2020 or as of December 28, 2019.
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, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2017.
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.