XML 22 R10.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Note D - Income Taxes | 12 Months Ended
--- | ---
Jan. 01, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE D—INCOME TAXES Consolidated earnings before income taxes consists of the following for 2021, 2020, and 2019:
|  | Year Ended |
|  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. |  | $ | 13,017 |  |  | $ | 18,838 |  |  | $ | 111 |
Foreign |  |  | 157,625 |  |  |  | 159,110 |  |  |  | 150,385 |
Total earnings before income taxes |  | $ | 170,642 |  |  | $ | 177,948 |  |  | $ | 150,496 |
Income tax expense (benefit) included inincome from continuing operations consists of the following:
|  | Year Ended |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (264 | ) |  | $ | 306 |  |  | $ | - |
State |  |  | 567 |  |  |  | 303 |  |  |  | 303 |
Foreign |  |  | 56,668 |  |  |  | 55,147 |  |  |  | 53,281 |
Total Current |  |  | 56,971 |  |  |  | 55,756 |  |  |  | 53,584 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (4,088 | ) |  |  | 1,317 |  |  |  | (3,120 | )
State |  |  | (40 | ) |  |  | (47 | ) |  |  | (42 | )
Foreign |  |  | 1,294 |  |  |  | (3,742 | ) |  |  | (452 | )
Total Deferred |  |  | (2,834 | ) |  |  | (2,472 | ) |  |  | (3,614 | )
|  | $ | 54,137 |  |  | $ | 53,284 |  |  | $ | 49,970 |
The effective tax rate for 2021, 2020, and 2019 reconciled to the statutory U.S. Federal tax rate is as follows:
|  | Year Ended |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Statutory U.S. federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 0.4 |  |  |  | 0.3 |  |  |  | 0.3 |
Permanent tax differences |  |  | 0.1 |  |  |  | 0.2 |  |  |  | - |
Excess foreign tax credits |  |  | (10.9 | ) |  |  | (9.9 | ) |  |  | (13.0 | )
Net increase in valuation allowance |  |  | 10.6 |  |  |  | 8.2 |  |  |  | 11.7 |
Foreign income tax rate differences |  |  | 1.8 |  |  |  | 1.7 |  |  |  | 4.3 |
Foreign withholding taxes |  |  | 7.9 |  |  |  | 7.7 |  |  |  | 8.6 |
Uncertain tax position reserve |  |  | (0.3 | ) |  |  | 0.8 |  |  |  | 0.4 |
All other, net |  |  | 1.1 |  |  |  | (0.1 | ) |  |  | (0.1 | )
|  |  | 31.7 | % |  |  | 29.9 | % |  |  | 33.2 | %
The effective tax rate for the year ended January 1, 2022 increased compared to the year ended January 2, 2021. This increase is due to a decrease in U.S. domestic pre-tax earnings and an increase related to unreserved tax settlements. The effective tax rate for the year ended January 1, 2022 benefited by lower foreign income tax rates compared to the year ended January 2, 2021. The significant categories of deferred taxes are as follows:
|  | January 1, |  |  | January 2, |
|  | 2022 |  |  | 2021 |
Deferred tax assets |  |  |  |  |  |  |  |
Inventory |  | $ | 5,106 |  |  | $ | 3,150 |
Accruals not currently deductible |  |  | 11,634 |  |  |  | 12,748 |
Equity-based compensation expense |  |  | 2,355 |  |  |  | 2,982 |
Property and equipment |  |  | 1,143 |  |  |  | 1,129 |
Intangible assets |  |  | 7,545 |  |  |  | 7,691 |
Capitalized R&D Expenses |  |  | 2,337 |  |  |  | - |
Tax credit carry forwards |  |  | 96,635 |  |  |  | 76,929 |
Net operating losses |  |  | 1,401 |  |  |  | 2,071 |
Other |  |  | 4,824 |  |  |  | 4,061 |
Gross deferred tax assets |  |  | 132,980 |  |  |  | 110,761 |
Valuation allowance |  |  | (99,958 | ) |  |  | (81,401 | )
Net deferred tax assets |  |  | 33,022 |  |  |  | 29,360 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property and equipment |  |  | (5,268 | ) |  |  | (4,900 | )
Foreign currency translation |  |  | (126 | ) |  |  | (1,691 | )
Prepaid expenses |  |  | (3,596 | ) |  |  | (4,043 | )
Intangible assets |  |  | (7,545 | ) |  |  | (7,691 | )
Withholding tax on unremitted earnings |  |  | (13,556 | ) |  |  | (14,589 | )
Other |  |  | (5,589 | ) |  |  | (3,815 | )
Gross deferred tax liabilities |  |  | (35,680 | ) |  |  | (36,729 | )
Net deferred taxes |  | $ | (2,658 | ) |  | $ | (7,369 | )
The Components of net deferred taxes on a jurisdiction basis are as follows:
|  | January 1, |  |  | January 2, |
|  | 2022 |  |  | 2021 |
Net deferred tax assets |  | $ | 4,839 |  |  | $ | 4,640 |
Net deferred tax liabilities |  |  | (7,497 | ) |  |  | (12,009 | )
Net deferred taxes |  | $ | (2,658 | ) |  | $ | (7,369 | )
As of January 1, 2022, the Company had foreign tax credit carryforwards of approximately $93,934. If unused, these carryforwards will expire between 2026 and 2031. The Company has generated excess foreign tax credits since the Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. This is due to the U.S. tax rate being lower than most foreign taxing jurisdiction rates where the Company operates. Although the Company can claim foreign tax credits against U.S. source income due to overall domestic losses generated in previous years, the Company does not believe it will be able to use more foreign tax credits than it generates in a single year. The Company believes these foreign tax credit carryforwards will expire unused based on available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, available tax planning strategies, and available carryback opportunities. Similar with prior years, the Company continues to maintain 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 facts and circumstances. The Company recorded a $1,964 valuation allowance on mirrored deferred tax assets recorded in the United States, which offset deferred tax liabilities of foreign disregarded entities. These mirrored deferred tax assets represent future foreign tax credits. This valuation allowance is necessary because the Company is limited in its ability to utilize future foreign tax credits due to the U.S. tax rate being lower than most foreign taxing jurisdiction rates where the Company operates. The Company also had $1,362 of Utah research credit carryforwards, and $1,339 of Federal research credit carryforwards as of January 1, 2022. If unused, the Utah research credit carryforwards expire between 2027 and 2035, and the Federal research credits expire between 2036 and 2041. Utah research credits are limited to Utah tax due and the Company has a history of generating more credits than it can use. Federal research credit carryforwards can only be used in a year when U.S. taxes are owed after foreign tax credits have been applied. Due to the lack of sufficient evidence to the contrary, the Company has placed a full valuation allowance on these credit carryforwards. In addition, the Company had $4,122 of foreign operating loss carry forwards, $3,926 of which have an unlimited carryforward period. The deferred tax asset associated with these losses was $1,327 and a valuation allowance of $1,327 has been applied against this deferred tax asset. The 2021 deferred tax asset for state-tax-loss carryforwards was $74. If unused, some of the state-tax-loss carryforwards will expire between 2031 and 2040 and others can be carried forward indefinitely. The total combined valuation allowance was $99,958 as of January 1, 2022. The 2021 valuation allowance represents a $18,557 net increase from 2020. 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 January 1, 2022, the cumulative amount of undistributed earnings of the Company’s non-U.S. subsidiaries held for indefinite reinvestment is approximately $4,000. If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $400. As of January 1, 2022, the Company reported $199 of unrecognized tax benefits in "Other current liabilities" and $809 in "Other long-term liabilities" for a combined total of $1,008 in unrecognized tax benefits that would impact the effective tax rate if recognized. This compares to $538 of unrecognized tax benefits in "Other current liabilities" and $990 in "Other long-term liabilities" for a combined total of $1,528 reported as of January 2, 2021. The following reconciliation provides the changes in unrecognized tax benefits that occurred during the 2021, 2020, and 2019 reporting years:
|  | Year Ended |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Beginning balance of unrecognized tax benefits |  | $ | 1,528 |  |  | $ | 560 |  |  | $ | 282 |
Increases related to prior year tax positions |  |  | 21 |  |  |  | 775 |  |  |  | 278 |
Decreases related to prior year tax positions |  |  | (330 | ) |  |  | - |  |  |  | - |
Increases related to current year tax positions |  |  | 424 |  |  |  | 753 |  |  |  | - |
Decreases for settlements with taxing authorities |  |  | (635 | ) |  |  | (560 | ) |  |  | - |
Ending balance of unrecognized tax benefits |  | $ | 1,008 |  |  | $ | 1,528 |  |  | $ | 560 |
The Company accounts for interest and penalties associated with unrecognized tax benefits as a component of income tax expense. For the period ended January 1, 2022 and January 2, 2021, the Company reported $91 and $491, respectively, as income tax expense related to interest and penalties. As of January 1, 2022, the Company recorded $162 of "Other current liabilities" and $63 of "Other long-term liabilities" associated with interest and penalties for unrecognized tax benefits. This compares to $243 of "Other current liabilities" and $248 of "Other long-term liabilities" associated with interest and penalties reported as of January 2, 2021. The Company files income tax returns in the United States and foreign jurisdictions. In general, the Company's tax filings are subject to examination for years ending on or after December 31, 2017. However, statutes of limitations in some markets may be as long as ten years for transfer pricing related issues.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
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://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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration