XML 33 R14.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 29, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Tax Cuts and Jobs Act of 2017 (2017 Tax Act) was signed into law on December 22, 2017 and its provisions are generally effective for tax years beginning January 1, 2018. The most significant impacts of the 2017 Tax Act to the Company include a decrease in the federal corporate income tax rate from 35% to 21%, and a one-time mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118) related to the income tax accounting implications of the 2017 Tax Act, which provides guidance on accounting for the 2017 Tax Act’s impact. In accordance with SAB 118, the Company recorded a provisional net income tax expense of $7,487,000, including the impact of state taxes, in the fourth quarter of 2017, which consisted of a provisional amount for the one-time mandatory transition tax of $10,303,000, partially offset by a provisional net tax benefit of $2,816,000 for the re-measurement of the Company's deferred income tax assets and liabilities at the 21% federal corporate income tax rate. During 2018, the Company completed its accounting for the 2017 Tax Act under the SAB 118 guidance and recorded a net reduction of $138,000 to the 2017 provisional amount related to the one-time mandatory transition tax. While the 2017 Tax Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, Global Intangible Low-Taxed Income (GILTI) and Base Erosion Anti-Abuse Tax (BEAT). The Company has elected to account for the GILTI tax in the period in which it is incurred and, therefore, has not provided the deferred income tax impact of GILTI in its consolidated financial statements. In addition, the Company does not expect to be subject to the minimum tax pursuant to the BEAT provisions. The components of income from continuing operations before provision for income taxes are as follows:
(In thousands) |  | December 29, 2018 |  | December 30, 2017 |  | December 31, 2016
Domestic |  | $ | (397 | ) |  | $ | 2,797 |  |  | $ | 6,196 |
Foreign |  | 79,925 |  |  | 54,856 |  |  | 38,353 |
|  | $ | 79,528 |  |  | $ | 57,653 |  |  | $ | 44,549 |
The components of the provision for income taxes from continuing operations are as follows:
(In thousands) |  | December 29, 2018 |  | December 30, 2017 |  | December 31, 2016
Current Provision: |  |  |  |  |  |
Federal |  | $ | 724 |  |  | $ | 7,835 |  |  | $ | 535 |
Foreign |  | 21,829 |  |  | 17,372 |  |  | 11,323 |
State |  | 169 |  |  | 285 |  |  | 838 |
|  | 22,722 |  |  | 25,492 |  |  | 12,696 |
Deferred (Benefit) Provision: |  |  |  |  |  |  |  |  |
Federal |  | (2,551 | ) |  | 4,682 |  |  | 1,738 |
Foreign |  | (1,761 | ) |  | (3,563 | ) |  | (1,818 | )
State |  | 72 |  |  | (541 | ) |  | (533 | )
|  | (4,240 | ) |  | 578 |  |  | (613 | )
|  | $ | 18,482 |  |  | $ | 26,070 |  |  | $ | 12,083 |
The provision for income taxes included in the accompanying consolidated statement of income is as follows:
(In thousands) |  | December 29, 2018 |  | December 30, 2017 |  | December 31, 2016
Continuing Operations |  | $ | 18,482 |  |  | $ | 26,070 |  |  | $ | 12,083 |
Discontinued Operation |  | — |  |  | — |  |  | 2 |
|  | $ | 18,482 |  |  | $ | 26,070 |  |  | $ | 12,085 |
The Company receives a tax deduction upon the exercise of nonqualified stock options and the vesting of RSUs. In 2016, the Company adopted ASU No. 2016-09, Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. This ASU requires that excess income tax benefits and tax deficiencies related to stock-based compensation arrangements be recognized as discrete items within the provision for income taxes instead of capital in excess of par value in the reporting period in which they occur. The Company recognized an income tax benefit of $1,097,000 in 2018, $608,000 in 2017 and $582,000 in 2016 in the Company's accompanying consolidated statement of income. The provision for income taxes from continuing operations in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate to income from continuing operations before provision for income taxes due to the following:
(In thousands) |  | December 29, 2018 |  | December 30, 2017 |  | December 31, 2016
Provision for Income Taxes at Statutory Rate (21% in 2018 and 35% in 2017 and 2016) |  | $ | 16,701 |  |  | $ | 20,179 |  |  | $ | 15,592 |
Increases (Decreases) Resulting From: |  |  |  |  |  |  |  |  |
State income taxes, net of federal tax |  | 164 |  |  | 151 |  |  | 189 |
U.S. tax cost of foreign earnings |  | 1,215 |  |  | 761 |  |  | 192 |
Foreign tax rate differential |  | 3,158 |  |  | (3,747 | ) |  | (3,921 | )
(Reversal of) provision for tax benefit reserves, net |  | (1,785 | ) |  | 1,517 |  |  | (76 | )
Change in valuation allowance |  | 141 |  |  | (341 | ) |  | (131 | )
Nondeductible expenses |  | 781 |  |  | 1,177 |  |  | 1,090 |
Research and development tax credits |  | (445 | ) |  | (297 | ) |  | (229 | )
Excess tax benefit related to stock-based compensation |  | (967 | ) |  | (581 | ) |  | (553 | )
Impact of the U.S. Tax Cuts and Jobs Act |  | (106 | ) |  | 7,093 |  |  | — |
Other |  | (375 | ) |  | 158 |  |  | (70 | )
|  | $ | 18,482 |  |  | $ | 26,070 |  |  | $ | 12,083 |
Net deferred tax liability in the accompanying consolidated balance sheet consists of the following:
(In thousands) |  | December 29, 2018 |  | December 30, 2017
Deferred Tax Asset: |  |  |  |
Foreign, state, and alternative minimum tax credit carryforwards |  | $ | 184 |  |  | $ | 185 |
Reserves and accruals |  | 3,555 |  |  | 4,455 |
Net operating loss carryforwards |  | 12,785 |  |  | 15,161 |
Inventory basis difference |  | 3,692 |  |  | 3,265 |
Research and development |  | — |  |  | 88 |
Employee compensation |  | 4,382 |  |  | 2,610 |
Allowance for doubtful accounts |  | 482 |  |  | 505 |
Other |  | 294 |  |  | 59 |
Deferred tax asset, gross |  | 25,374 |  |  | 26,328 |
Less: valuation allowance |  | (9,946 | ) |  | (10,835 | )
Deferred tax asset, net |  | 15,428 |  |  | 15,493 |
Deferred Tax Liability: |  |  |  |  |  |
Goodwill and intangible assets |  | (28,060 | ) |  | (32,120 | )
Fixed asset basis difference |  | (3,565 | ) |  | (4,213 | )
Provision for unremitted foreign earnings |  | (1,124 | ) |  | (2,718 | )
Research and development |  | (54 | ) |  | — |
Other |  | (619 | ) |  | (554 | )
Deferred tax liability |  | (33,422 | ) |  | (39,605 | )
Net deferred tax liability |  | $ | (17,994 | ) |  | $ | (24,112 | )
The deferred tax assets and liabilities are presented in the accompanying consolidated balance sheet within other assets and long-term deferred income taxes on a net basis by tax jurisdiction. The Company has established valuation allowances related to certain domestic and foreign deferred tax assets on deductible temporary differences, tax losses, and tax credit carryforwards. The valuation allowance at year-end 2018 was $9,946,000, consisting of $418,000 in the United States and $9,528,000 in foreign jurisdictions. The decrease in the valuation allowance in 2018 of $889,000 related primarily to fluctuations in foreign currency exchange rates and tax rate changes. Compliance with ASC 740 requires the Company to periodically evaluate the necessity of establishing or adjusting a valuation allowance for deferred tax assets depending on whether it is more likely than not that a related tax benefit will be realized in future periods. When assessing the need for a valuation allowance in a tax jurisdiction, the Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As part of this evaluation, the Company considers its cumulative three-year history of earnings before income taxes, taxable income in prior carryback years, future reversals of existing taxable temporary differences, prudent and feasible tax planning strategies, and expected future results of operations. As of year-end 2018, the Company continued to maintain a valuation allowance in the United States against a portion of its state net operating loss carryforwards due to the uncertainty of future profitability in state jurisdictions. As of year-end 2018, the Company maintained valuation allowances in certain foreign jurisdictions because of the uncertainty of future profitability. At year-end 2018, the Company had domestic state net operating loss carryforwards of $25,852,000 and foreign net operating loss carryforwards of $44,495,000. The domestic state net operating loss carryforwards will expire in the years 2019 through 2037. Their utilization is limited to future taxable income from the Company's domestic subsidiaries. The foreign net operating loss carryforwards do not expire. At year-end 2018, the Company had approximately $283,922,000 of unremitted foreign earnings. The Company intends to repatriate the distributable reserves of select foreign subsidiaries back to the United States and has recognized $830,000 of net tax expense on the estimated repatriation amount during 2018. Except for these select foreign subsidiaries, the Company intends to indefinitely reinvest $272,846,000 of these earnings of its international subsidiaries in order to support the current and future capital needs of their operations in the foreign jurisdictions, including the repayment of the Company’s foreign debt. The related foreign withholding taxes, which would be required if the Company were to remit these foreign earnings to the United States, would be approximately $4,949,000. The Company operates within multiple tax jurisdictions and could be subject to audit in those jurisdictions. Such audits can involve complex income tax issues, which may require an extended period of time to resolve and may cover multiple years. In management's opinion, adequate provisions for income taxes have been made for all years subject to audit. As of year-end 2018, the Company had $12,364,000 of unrecognized tax benefits which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits at year-end 2018 and year-end 2017 is as follows:
(In thousands) |  | December 29, 2018 |  | December 30, 2017
Unrecognized Tax Benefits, Beginning of Year |  | $ | 7,843 |  |  | $ | 5,467 |
Gross Increases—Tax Positions in Prior Periods |  | 1,019 |  |  | 4 |
Gross Decreases—Tax Positions in Prior Periods |  | (390 | ) |  | (22 | )
Gross Increases—Current-period Tax Positions |  | 7,344 |  |  | 2,229 |
Settlements |  | (131 | ) |  | — |
Lapses of Statutes of Limitations |  | (3,190 | ) |  | (11 | )
Currency Translation |  | (131 | ) |  | 176 |
Unrecognized Tax Benefits, End of Year |  | $ | 12,364 |  |  | $ | 7,843 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company has accrued $2,087,000 at year-end 2018 and $1,523,000 at year-end 2017 for the potential payment of interest and penalties. The interest and penalties included in the accompanying consolidated statement of income was an expense of $544,000 in 2018 and $199,000 in 2017. The Company is currently under audit in certain tax jurisdictions. It is reasonably possible that over the next fiscal year the amount of liability for unrecognized tax benefits may be reduced by up to $841,000 primarily from the expiration of tax statutes of limitations. The Company remains subject to U.S. Federal income tax examinations for the tax years 2015 through 2018, and to non-U.S. income tax examinations for the tax years 2004 through 2018. In addition, the Company remains subject to state and local income tax examinations in the United States for the tax years 2004 through 2018.

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://fasb.org/us-gaap/role/ref/legacyRef -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