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Income Taxes | 12 Months Ended
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Dec. 29, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Note 14. Income Taxes Income Tax Assets and Liabilities - The Company accounts for income taxes whereby deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax accounting for assets and liabilities. Also, deferred tax assets are reduced by a valuation allowance to the extent that management cannot conclude that it is more likely than not that a portion of the deferred tax asset will be realized in the future. The Company evaluates the deferred tax assets on a continuous basis throughout the year to determine whether or not a valuation allowance is appropriate. Factors used in this determination include future expected income and the underlying asset or liability which generated the temporary tax difference. The income tax provision is primarily impacted by federal statutory rates, state and foreign income taxes, and changes in the valuation allowance. Income (loss) before provision for income taxes consists of the following (in thousands):
|  | Years Ended |
|  | December 29, 2018 |  |  | December 30, 2017 |  |  | December 31, 2016 |
Domestic |  | $ | 52,836 |  |  | $ | 34,238 |  |  | $ | 25,372 |
Foreign |  |  | 14,688 |  |  |  | 9,060 |  |  |  | 3,763 |
Income (loss) before income taxes |  | $ | 67,524 |  |  | $ | 43,298 |  |  | $ | 29,135 |
The provision (benefit) for income taxes consists of the following (in thousands):
|  | Years Ended |
|  | December 29, 2018 |  |  | December 30, 2017 |  |  | December 31, 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 616 |  |  | $ | 3,250 |  |  | $ | 697 |
State |  |  | 142 |  |  |  | 9 |  |  |  | 85 |
Foreign |  |  | 5,054 |  |  |  | 2,998 |  |  |  | 2,111 |
|  |  | 5,812 |  |  |  | 6,257 |  |  |  | 2,893 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 3,875 |  |  |  | 6,314 |  |  |  | (16,641 | )
State |  |  | (18 | ) |  |  | 53 |  |  |  | (320 | )
Foreign |  |  | 207 |  |  |  | 472 |  |  |  | (832 | )
|  |  | 4,064 |  |  |  | 6,839 |  |  |  | (17,793 | )
Provision (benefit) for income taxes |  | $ | 9,876 |  |  | $ | 13,096 |  |  | $ | (14,900 | )
Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
|  | At |
|  | December 29, 2018 |  |  | December 30, 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Reserves and accruals |  | $ | 5,704 |  |  | $ | 5,797 |
Deferred revenue |  |  | 241 |  |  |  | 240 |
Shared-based compensation |  |  | 1,644 |  |  |  | 1,483 |
Tax credit carry-forwards |  |  | 6,920 |  |  |  | 9,669 |
Net operating losses |  |  | 6,022 |  |  |  | 9,755 |
Depreciation & amortization |  |  | (7,528 | ) |  |  | (1,525 | )
Other |  |  | 532 |  |  |  | 207 |
Total deferred tax assets |  |  | 13,535 |  |  |  | 25,626 |
Less: Valuation allowance |  |  | (10,966 | ) |  |  | (13,702 | )
Total deferred tax assets net of valuation allowance |  |  | 2,569 |  |  |  | 11,924 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation & amortization |  |  | (13 | ) |  |  | (12 | )
Other |  |  | (149 | ) |  |  | (167 | )
Total deferred tax liabilities |  |  | (162 | ) |  |  | (179 | )
Net deferred tax assets |  | $ | 2,407 |  |  | $ | 11,745 |
As of December 29, 2018, the Company had net operating loss carryforwards of $23.5 million in California, $1.7 million in other states, and $18.3 million in foreign countries, which begin to expire in 2018. As of December 29, 2018, the Company had available carryforward Federal and California R&D tax credits of $5.4 million and $10.2 million, respectively. Federal R&D tax credit carryforwards begin to expire in 2034. State R&D tax credits carryforward indefinitely. During the years ended December 29, 2018, and December 30, 2017, the change in valuation allowances was ($2.7) million and $1.5 million, respectively. The decrease in the valuation allowance in 2018 was primarily related to a $4.8 million decrease from the dissolution of Nanda Technologies, a Germany based subsidiary. This amount was offset by an increase net benefit of the California deferred tax assets of $0.5 million and a $1.6 million increase from deferred tax assets in the Company’s Switzerland subsidiary. The realization of deferred tax assets is primarily dependent on the Company generating sufficient U.S. and foreign taxable income in future fiscal years. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all the deferred tax assets will not be realized. The Company continues to maintain valuation allowances against its California and Switzerland deferred tax assets as a result of uncertainties regarding the realization of the assets due to cumulative losses and uncertainty of future taxable income. The Company will continue to assess the realizability of the deferred tax assets in each of the applicable jurisdictions and maintain the valuation allowances until sufficient positive evidence exists to support a reversal. In the event the Company determines that the deferred tax assets are realizable, an adjustment to the valuation allowances will be reflected in the tax provision for the period such determination is made. Differences between income taxes computed by applying the statutory federal income tax rate to income (loss) before income taxes and the provision (benefit) for income taxes consist of the following (in thousands):
|  | Years Ended |
|  | December 29, 2018 |  |  | December 30, 2017 |  |  | December 31, 2016 |
Income taxes computed at U.S. statutory rate |  | $ | 14,180 |  |  | $ | 15,153 |  |  | $ | 10,197 |
State income taxes |  |  | 379 |  |  |  | 227 |  |  |  | 223 |
Foreign tax rate differential |  |  | (2,382 | ) |  |  | 794 |  |  |  | 3,502 |
Change in valuation allowance |  |  | 3,037 |  |  |  | 1,490 |  |  |  | (25,738 | )
Non-deductible equity compensation |  |  | (1,241 | ) |  |  | (1,803 | ) |  |  | 380 |
Tax credits |  |  | (3,876 | ) |  |  | (2,336 | ) |  |  | (3,191 | )
Domestic production activities deduction |  |  | - |  |  |  | (608 | ) |  |  | (354 | )
Liabilities for uncertain tax positions |  |  | 12 |  |  |  | 18 |  |  |  | 67 |
Other, net |  |  | (233 | ) |  |  | 161 |  |  |  | 14 |
Provision (benefit) for income taxes |  | $ | 9,876 |  |  | $ | 13,096 |  |  | $ | (14,900 | )
As of December 29, 2018, The Company has provided U.S income taxes on all its foreign earnings. The Company continues to permanently reinvest the cash held offshore to support its working capital needs. Accordingly, no additional foreign withholding taxes that may be required from certain jurisdictions in the event of a cash distribution have been provided thereon. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As of December 29, 2018, the Company had finalized all provisional amounts related to the Tax Act. Finalizing provisional adjustments related to the Tax Act did not have a material impact on the Company’s consolidated financial statements as of December 29, 2018. The Company expects further guidance may be forthcoming from the Financial Accounting Standards Board and the Securities and Exchange Commission, as well as regulations, interpretations and rulings from federal and state tax agencies, which could result in additional impacts. The 2017 Tax Act creates a new requirement that global intangible low-taxed income (“GILTI”) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company’s selection of an accounting policy for 2018 with respect to the GILTI tax rules was to treat GILTI tax as a current period expense under the period cost method. The Company recognizes tax liabilities for uncertain tax positions and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. The accounting for uncertainty in income taxes recognized in an enterprise's financial statements prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return, and the derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | At |
|  | December 29, 2018 |  |  | December 30, 2017 |  |  | December 31, 2016 |
Unrecognized tax benefits - beginning of the period |  | $ | 7,151 |  |  | $ | 6,477 |  |  | $ | 6,961 |
Gross increases-tax positions in prior period |  |  | 132 |  |  |  | 32 |  |  |  | 23 |
Gross decreases-tax positions in prior period |  |  | — |  |  |  | — |  |  |  | (1,193 | )
Gross increases-current-period tax positions |  |  | 1,000 |  |  |  | 723 |  |  |  | 686 |
Lapse of statute of limitations |  |  | (175 | ) |  |  | (81 | ) |  |  | — |
Unrecognized tax benefits - end of the period |  | $ | 8,108 |  |  | $ | 7,151 |  |  | $ | 6,477 |
The unrecognized tax benefit at December 29, 2018, was $8.1 million, of which $4.6 million would impact the effective tax rate if recognized. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. The total amount of penalties and interest were not material as of December 29, 2018, December 30, 2017, and December 31, 2016. The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The Company is subject to taxation in the U.S. and various states including California, and the foreign jurisdictions of Korea, Japan, Taiwan, China, Singapore, Germany, France, United Kingdom, Switzerland, and Israel. Due to tax attribute carry-forwards, the Company is subject to examination for tax years 2003 forward for U.S. tax purposes. The Company was also subject to examination in various states for tax years 2002 forward. The Company is subject to examination for tax years 2010 forward for various foreign jurisdictions.

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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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