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Income Taxes | 12 Months Ended
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Dec. 29, 2018
Income Taxes [Abstract] |
Income Taxes | NOTE E – INCOME TAXES ﻿ ﻿ ﻿
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﻿Consolidated earnings before income taxes consists of the following for 2016, 2017 and 2018: |
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﻿ |  | Year ended |
﻿ |  | 2016 |  | 2017 |  | 2018 |
﻿ |  |  |  |  |  |  |
﻿U.S. |  | $ (5,648) |  | $ (25,167) |  | $ 1,475 |
﻿Foreign |  | 144,200 |  | 159,807 |  | 190,035 |
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﻿Total earnings before income taxes |  | $ 138,552 |  | $ 134,640 |  | $ 191,510 |
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﻿Income tax expense (benefit) included in income from net earnings consists of the following: |
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﻿ |  | Year ended |
﻿ |  | 2016 |  | 2017 |  | 2018 |
﻿ |  |  |  |  |  |  |
﻿Current |  |  |  |  |  |  |
﻿Federal |  | $ (4,361) |  | $ (171) |  | $ - |
﻿State |  | 756 |  | (368) |  | 337 |
﻿Foreign |  | 45,568 |  | 52,167 |  | 64,342 |
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﻿Total Current |  | 41,963 |  | 51,628 |  | 64,679 |
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﻿Deferred |  |  |  |  |  |  |
﻿Federal |  | (6,813) |  | 23,609 |  | (613) |
﻿State |  | (67) |  | 132 |  | 24 |
﻿Foreign |  | 3,428 |  | (3,264) |  | 1,196 |
﻿ |  |  |  |  |  |  |
﻿Total Deferred |  | (3,452) |  | 20,477 |  | 607 |
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﻿ |  | $ 38,511 |  | $ 72,105 |  | $ 65,286 |
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﻿ NOTE E – INCOME TAXES – CONTINUED ﻿
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﻿The effective tax rate for 2016, 2017, and 2018 reconciled to the statutory U.S. Federal tax rate is as follows: |
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﻿ |  | Year ended |
﻿ |  | 2016 |  | 2017 |  | 2018 |
﻿ |  |  |  |  |  |  |
﻿Statutory U.S. federal income tax rate |  | 35.0 | % | 35.0 | % | 21.0 | %
﻿State income taxes, net of federal tax benefit |  | 0.5 |  | (0.2) |  | 0.3 |
﻿Excess tax benefits on equity awards |  | (6.6) |  | (3.4) |  | - |
﻿Permanent tax differences |  | (0.4) |  | 0.3 |  | 0.4 |
﻿Excess foreign tax credits |  | - |  | - |  | (14.7) |
﻿Net increase in valuation allowance |  | - |  | - |  | 15.8 |
﻿Foreign income tax rate differences |  | (0.2) |  | (0.2) |  | 4.2 |
﻿Foreign withholding taxes |  | - |  | 9.3 |  | 8.1 |
﻿U.S. tax reform |  | - |  | 13.1 |  | - |
﻿All other, net |  | (0.5) |  | (0.3) |  | (1.0) |
﻿ |  |  |  |  |  |  |
﻿ |  | 27.8 | % | 53.6 | % | 34.1 | %
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NOTE E – INCOME TAXES – CONTINUED ﻿
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﻿The significant categories of deferred taxes are as follows: |
﻿ |  | December 30, |  | December 29, |
﻿ |  | 2017 |  | 2018 |
﻿Deferred tax assets |  |  |  |  |
﻿Inventory differences |  | $ 1,988 |  | $ 2,580 |
﻿Accruals not currently deductible |  | 4,245 |  | 4,769 |
﻿Equity-based compensation expense |  | 5,056 |  | 4,319 |
﻿Depreciation/amortization |  | - |  | 809 |
﻿Intangible assets |  | 8,792 |  | 7,951 |
﻿Foreign currency translation |  | - |  | 1,141 |
﻿Tax credit carry forwards |  | 10,690 |  | 41,034 |
﻿Net operating losses |  | 795 |  | 1,462 |
﻿Other |  | 3,860 |  | 3,874 |
﻿ |  |  |  |  |
﻿Gross deferred tax assets |  | 35,426 |  | 67,939 |
﻿Valuation allowance |  | (13,980) |  | (44,199) |
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﻿Net deferred tax assets |  | 21,446 |  | 23,740 |
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﻿Deferred tax liabilities |  |  |  |  |
﻿Depreciation/amortization |  | (4,449) |  | (4,983) |
﻿Foreign currency translation |  | (759) |  | - |
﻿Prepaid expenses |  | (739) |  | (1,828) |
﻿Intangible assets |  | (8,792) |  | (7,951) |
﻿Withholding tax on unremitted earnings |  | (12,562) |  | (14,608) |
﻿Other |  | (5,016) |  | (4,389) |
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﻿Gross deferred tax liabilities |  | (32,317) |  | (33,759) |
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﻿Net deferred taxes |  | $ (10,871) |  | $ (10,019) |
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﻿The Components of deferred taxes, net on a jurisdiction basis are as follows: |  |  |
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﻿ |  | December 30, |  | December 29, |
﻿ |  | 2017 |  | 2018 |
﻿ |  |  |  |  |
﻿Net noncurrent deferred tax assets |  | $ 2,859 |  | $ 3,348 |
﻿Net noncurrent deferred tax liabilities |  | (13,730) |  | (13,367) |
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﻿Net deferred taxes |  | $ (10,871) |  | $ (10,019) |
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﻿ ﻿ NOTE E – INCOME TAXES – CONTINUED ﻿ As of December 29, 2018, the Company had foreign tax credit carryforwards of approximately $38,187. If unused, these carryforwards will expire between 2026 and 2028. Because the U.S. tax rate is lower than most of the foreign tax rates where the Company has operations, the Company expects to continue generating excess foreign tax credits in future years. Same as 2017, the company has placed a full valuation allowance on its foreign tax credit carryforwards. Valuation allowances are determined using a more-likely-than-not realization criteria and are based upon all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The U.S. jurisdiction has experienced overall cumulative domestic losses over the previous three years, which is a significant piece of negative evidence for the future utilization of foreign tax credit carryforwards. However, overall domestic losses do not expire and can be recaptured by recharacterizing U.S. source taxable income as foreign source taxable income. Recharacterized foreign source taxable income would allow for utilization of foreign tax credit carryforwards. The Company will continue to evaluate the positive and negative evidence related to this valuation allowance. ﻿ The Company recorded a $1,580 valuation allowance on mirrored deferred tax assets recorded in the U.S. to offset deferred tax liabilities of foreign disregarded entities, which will generate additional U.S. foreign tax credits in the future. This valuation allowance is necessary because the Company is limited in its ability to utilize future U.S. foreign tax credits due to the decrease in the U.S. corporate tax rate. ﻿ The Company also has $1,022 of Utah research credit carryforwards, $979 of Philippines minimum income tax credit carryforwards, and $846 of Federal research credit carryforwards as of December 29, 2018. If unused, the Utah research credit carryforwards expire between 2027 and 2032, the Philippines’ minimum income tax credit carryforwards expire between 2019 and 2021, and the Federal research credits expire between 2036 and 2038. Utah research credits are limited to Utah tax due, which has declined because of overall domestic losses. The Philippines’ minimum income tax credit carryforwards can be used against Philippines regular tax. However, the company doesn’t believe it will report Philippines regular tax in the near future based on its transfer pricing guidance. Federal research credit carryforwards can only be used in a year when U.S. taxes are owed after foreign tax credits have been fully utilized. Same as the foreign tax credit carryforwards, the Company has placed a full valuation allowance on these credit carryforwards as well. ﻿ In addition, the Company has $4,296 of foreign operating loss carry forwards, $3,811 of which have an unlimited carryforward period. The deferred tax asset associated with these losses is $1,385 and a valuation allowance of $1,278 has been applied against this deferred tax asset. The 2018 deferred tax asset for state-tax-loss carryforwards was $77. If unused, some of the state-tax-loss carryforwards will expire between 2030 and 2035 and others can be carried forward indefinitely. ﻿ The valuation allowance primarily represents amounts for tax credit carryforwards and foreign operating loss carryforwards. However, valuation allowances on other foreign deferred tax assets were $307 for a combined valuation allowance of $44,199 as of December 29, 2018. The 2018 valuation allowance represents a $30,219 net increase from 2017. If the Company determines that there is sufficient evidence to remove the valuation allowances addressed above, the valuation allowance will be released and the provision for income taxes will be reduced. ﻿ As of December 29, 2018, the Company has continued its position to return all foreign earnings to the U.S. parent company and has recorded deferred tax liabilities of $14,608 for foreign withholding taxes associated with foreign retained earnings and cross-border payments. ﻿ The Company recognizes the impact of a tax position in the financial statements if that position is more likely than not to be sustained on audit, based on the technical merits of the position. As of December 30, 2017 and December 29, 2018, the Company had no significant unrecognized tax benefits. ﻿ From time to time, the Company is subject to federal, state, and foreign tax authority income tax examinations. The Company remains subject to income tax examinations for each of its open tax years, which extend back to 2015 under most circumstances. Certain taxing jurisdictions may provide for additional open years depending upon their statutes or if an audit is ongoing. ﻿

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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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