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Income Taxes | 12 Months Ended
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Jan. 02, 2021
Income Taxes |
Income Taxes | 17. Income Taxes Income before income taxes includes the following components (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | January 2, | ​ | December 28, | ​ | December 29,
​ |  | 2021 |  | 2019 | ​ | 2018
Domestic |  | $ | (19,491) |  | $ | 2,025 |  | $ | 19,777
Foreign | ​ | ​ | 34,792 | ​ |  | 47,624 | ​ |  | 52,384
​ | ​ | $ | 15,301 | ​ | $ | 49,649 | ​ | $ | 72,161
​ The provision (benefit) for income taxes consists of the following (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | January 2, | ​ | December 28, | ​ | December 29,
​ |  | 2021 |  | 2019 |  | 2018
Current: |  |  |  |  |  |
Domestic | ​ | $ | 1,485 | ​ | $ | (779) | ​ | $ | (8,843)
Foreign | ​ | ​ | 7,803 | ​ |  | 8,157 | ​ |  | 5,888
Total Current | ​ | ​ | 9,288 | ​ |  | 7,378 | ​ |  | (2,955)
Deferred: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Domestic | ​ | ​ | (4,031) | ​ |  | 33,624 | ​ |  | (8,978)
Foreign | ​ | ​ | (2,487) | ​ |  | (10,618) | ​ |  | 503
Total Deferred | ​ | ​ | (6,518) | ​ |  | 23,006 | ​ |  | (8,475)
Provision (benefit) for income taxes | ​ | $ | 2,770 | ​ | $ | 30,384 | ​ | $ | (11,430)
​ ​ 17. Income Taxes (Continued) The reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended |
​ | ​ | January 2, | ​ | December 28, | ​ | December 29, |
​ |  | 2021 |  | 2019 |  | 2018 |
Federal statutory rate |  | 21.0 | % | 21.0 | % | 21.0 | %
Foreign tax rate benefit |  | (19.2) | ​ | (14.9) | ​ | (14.8) | ​
Research and development tax credits |  | (50.9) | ​ | (15.2) | ​ | (9.8) | ​
GILTI and Subpart F income | ​ | 35.7 | ​ | 4.9 | ​ | 4.1 | ​
Nondeductible (nontaxable) foreign items | ​ | (1.5) | ​ | 5.4 | ​ | 4.4 | ​
State tax expense | ​ | 2.6 | ​ | 1.0 | ​ | 1.5 | ​
Release of prior year unrecognized tax benefits |  | — | ​ | (0.4) | ​ | (2.7) | ​
Nondeductible officer compensation |  | 15.7 | ​ | 4.3 | ​ | 2.4 | ​
Change in cost-sharing treatment of stock-based compensation | ​ | — | ​ | 54.8 | ​ | (2.2) | ​
Excess tax benefit of stock-based compensation | ​ | (4.0) | ​ | (2.2) | ​ | (5.9) | ​
Change in prior period valuation allowance | ​ | 2.5 | ​ | 1.3 | ​ | (2.5) | ​
One-time impacts of tax reform |  | — | ​ | (0.5) | ​ | (11.5) | ​
Nondeductible (nontaxable) domestic items | ​ | 14.8 | ​ | 2.8 | ​ | 1.5 | ​
Other |  | 1.4 | ​ | (1.1) | ​ | (1.3) | ​
Effective Tax Rate |  | 18.1 | % | 61.2 | % | (15.8) | %
​ The effective tax rate for fiscal 2020 decreased from fiscal 2019 primarily due to a fiscal 2019 change in the Company’s position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement offset by the increased impact of fiscal 2020 permanent tax differences. The effective tax rate for fiscal 2019 increased from fiscal 2018 primarily due to a change in the Company’s financial statement position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement. The Company’s operations in Singapore are subject to reduced tax rates through June 30, 2024, as long as certain conditions are met. The impact of the tax holiday decreased foreign taxes by $1.8 million in fiscal 2020 (representing $0.04 per diluted share), by $4.0 million in fiscal 2019 (representing $0.09 per diluted share), and by $8.1 million in fiscal 2018 (representing $0.18 per diluted share). The Tax Cuts and Jobs Act was enacted in the U.S. on December 22, 2017 and required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred from U.S income tax under U.S. tax law. The Company elected to pay the transition tax over the eight-year period provided in the Act. As of January 2, 2021, the unpaid balance of its transition tax obligation is $21.4 million, which is payable between April 2022 and April 2025. This is recorded as a component of other non-current liabilities in the Consolidated Balance Sheet. ​ 17. Income Taxes (Continued) Deferred Income Taxes Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. Significant components of the Company’s deferred taxes as of January 2, 2021 and December 28, 2019 are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | January 2, |  | December 28,
​ |  | 2021 |  | 2019
Deferred tax assets: |  | ​ | ​ | ​ | ​ | ​
Net operating loss carryforwards |  | $ | 6,839 | ​ | $ | 7,912
Tax credit carryforwards | ​ | ​ | 22,421 | ​ | ​ | 14,755
Stock-based compensation |  |  | 2,683 | ​ |  | 2,619
Intangible assets | ​ | ​ | 9,802 | ​ | ​ | 7,135
Fixed assets | ​ | ​ | 261 | ​ | ​ | 289
Capitalized research and development |  |  | 1,237 | ​ |  | 1,735
Deferred income on shipments to distributors |  |  | 3,099 | ​ |  | 4,018
Leases | ​ | ​ | 6,335 | ​ | ​ | 3,446
Accrued liabilities and other |  |  | 7,652 | ​ |  | 7,374
​ |  |  | 60,329 | ​ |  | 49,283
Less: Valuation allowance |  |  | (5,311) | ​ |  | (4,486)
​ |  |  | 55,018 | ​ |  | 44,797
Deferred tax liabilities: |  | ​ | ​ | ​ | ​ | ​
Intangible assets | ​ | ​ | 16,758 | ​ | ​ | 16,621
Fixed assets | ​ | ​ | 8,473 | ​ | ​ | 4,969
Leases | ​ | ​ | 5,999 | ​ | ​ | 3,166
Debt | ​ | ​ | 21,674 | ​ | ​ | 5,741
Prepaid expenses and other |  |  | 4,919 | ​ |  | 2,424
​ |  |  | 57,823 | ​ |  | 32,921
Net deferred tax assets (liabilities) |  | $ | (2,805) | ​ | $ | 11,876
​ As of January 2, 2021, the Company had federal net operating loss and research and development tax credit carryforwards of approximately $23.2 million and $1.9 million, respectively, as a result of the Silicon Clocks, Spectra Linear and Ember acquisitions. These carryforwards expire in fiscal years 2021 through 2031. Recognition of these loss and credit carryforwards is subject to an annual limit, which may cause them to expire before they are used. Additionally, as of January 2, 2021, the Company had generated $10.5 million of federal research and development credit carryforwards and $0.6 million of foreign tax credit carryforwards. The federal research and development credits expire in fiscal years 2039 through 2040, and the foreign tax credits expire in 2030. These credits are not currently subject to an annual limitation. The Company also had state loss, state tentative minimum tax credit, and state research and development tax credit carryforwards of approximately $31.6 million, $0.1 million, and $13.0 million, respectively. A portion of these loss and credit carryforwards was generated by the Company and a portion was acquired through the Integration Associates, Silicon Clocks, Spectra Linear and Zentri acquisitions. Certain of these carryforwards expire in fiscal years 2024 through 2036, and others do not expire. Recognition of some of these loss and credit carryforwards is subject to an annual limit, which may cause them to expire before they are used. 17. Income Taxes (Continued) A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized. The Company maintains a valuation allowance with respect to certain deferred tax assets relating to state research and development tax credit and state net operating loss carryforwards. The following table summarizes the activity related to the valuation allowance for deferred tax assets (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance at | ​ | Additions | ​ |  | ​ | ​ |  | ​
​ | ​ | Beginning of | ​ | Charged to | ​ | ​ | ​ | ​ | Balance at
​ |  | Period |  | Expenses |  | Deductions |  | End of Period
Year ended January 2, 2021 | ​ | $ | 4,486 |  | $ | 847 |  | $ | (22) |  | $ | 5,311
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year ended December 28, 2019 | ​ | $ | 4,975 |  | $ | 1,044 |  | $ | (1,533) |  | $ | 4,486
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year ended December 29, 2018 | ​ | $ | 6,518 | ​ | $ | 435 | ​ | $ | (1,978) | ​ | $ | 4,975
​ At the end of fiscal 2020, undistributed earnings of certain of the Company's foreign subsidiaries of approximately $94.8 million are intended to be permanently reinvested outside the U.S. Accordingly, no provision for foreign withholding tax and state income taxes associated with a distribution of these earnings has been made. Determination of the amount of the unrecognized deferred tax liability on these unremitted earnings is not practicable. Uncertain Tax Positions The following table summarizes the activity related to gross unrecognized tax benefits (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | January 2, | ​ | December 28, | ​ | December 29,
​ |  | 2021 |  | 2019 |  | 2018
Beginning balance | ​ | $ | 2,276 | ​ | $ | 2,036 | ​ | $ | 3,187
Additions based on tax positions related to current year | ​ |  | 577 | ​ |  | 436 | ​ |  | 630
Additions based on tax positions related to prior years | ​ |  | — | ​ |  | — | ​ |  | 115
Reductions based on tax positions related to prior years | ​ | ​ | — | ​ | ​ | (196) | ​ | ​ | —
Reductions for tax positions as a result of a lapse of the applicable statute of limitations | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (1,896)
Ending balance | ​ | $ | 2,853 | ​ | $ | 2,276 | ​ | $ | 2,036
​ As of January 2, 2021, December 28, 2019 and December 29, 2018, the Company had gross unrecognized tax benefits, inclusive of interest, of $3.0 million, $2.4 million and $2.1 million, respectively, of which $2.1 million, $1.9 million and $2.1 million, respectively, would affect the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision (benefit) for income taxes. These amounts were not material for any of the periods presented. Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013 – 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction. The Company is currently appealing the assessment. The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $16.5 million additional Norwegian income tax. The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained. The Company plans to exhaust all available administrative remedies, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies. 17. Income Taxes (Continued) The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements. Tax years 2015 through 2020 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company is not currently under audit in any major taxing jurisdiction. The Company does not expect material changes to its gross unrecognized tax benefits in the next 12 months.

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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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