Income Taxes (Tables)

12 Months Ended

Dec. 28, 2019

Income Taxes

Schedule of income before income taxes

Income before income taxes includes the following components (in thousands):

	Year Ended
	December 28,		December 29,		December 30,
	2019		2018		2017
Domestic	$	2,025	$	19,777	$	9,700
Foreign		47,624		52,384		67,203
	$	49,649	$	72,161	$	76,903

Schedule of provision (benefit) for income taxes

The provision (benefit) for income taxes consists of the following (in thousands):

	Year Ended
	December 28,		December 29,		December 30,
	2019		2018		2017
Current:
Domestic	$	(779)	$	(8,843)	$	48,947
Foreign		8,157		5,888		7,077
Total Current		7,378		(2,955)		56,024
Deferred:
Domestic		33,624		(8,978)		(25,760)
Foreign		(10,618)		503		(453)
Total Deferred		23,006		(8,475)		(26,213)
Provision (benefit) for income taxes	$	30,384	$	(11,430)	$	29,811

Schedule of reconciliation of federal statutory tax rate to effective tax rate

17. Income Taxes (Continued)

The reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:

	Year Ended
	December 28,		December 29,		December 30,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	35.0	%
Foreign tax rate benefit	(13.8)		(12.9)		(25.4)
Research and development tax credits	(15.2)		(9.8)		(4.5)
GILTI and Subpart F income	5.8		4.3		1.4
Nondeductible (nontaxable) foreign expenses	3.9		3.9		1.1
State tax expense	1.0		1.5		0.9
Release of prior year unrecognized tax benefits	(0.4)		(2.7)		(0.6)
Nondeductible officer compensation	4.3		2.4		1.5
Other tax effects of equity compensation	0.8		(0.4)		(2.2)
Change in cost-sharing treatment of stock-based compensation	54.8		(2.2)		5.2
Excess tax benefit of stock-based compensation	(2.2)		(5.9)		(5.6)
Change in prior period valuation allowance	1.3		(2.5)		(1.3)
Transition tax on unremitted foreign earnings	—		(8.4)		70.8
Revaluation of deferred tax balances	—		0.3		28.2
Other deferred tax impacts of tax reform	(0.5)		(3.1)		(64.8)
Other	0.4		(1.3)		(0.9)
Effective Tax Rate	61.2	%	(15.8)	%	38.8	%

Schedule of significant components of deferred 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 December 28, 2019 and December 29, 2018 are as follows (in thousands):

	December 28,		December 29,
	2019		2018
Deferred tax assets:
Net operating loss carryforwards	$	7,912	$	9,973
Research and development tax credit carryforwards		14,755		12,500
Stock-based compensation		2,619		4,360
Depreciation and amortization		7,424		7,799
Capitalized research and development		1,735		2,521
Deferred income on shipments to distributors		4,018		5,824
Expected future cost-sharing adjustment		—		25,257
Leases		3,446		—
Accrued liabilities and other		7,374		7,737
		49,283		75,971
Less: Valuation allowance		(4,486)		(4,975)
		44,797		70,996
Deferred tax liabilities:
Acquired intangible assets		16,621		20,656
Depreciation and amortization		4,969		4,604
Leases		3,166		—
Long-term debt		5,741		8,080
Prepaid expenses and other		2,424		2,142
		32,921		35,482
Net deferred tax assets	$	11,876	$	35,514

Schedule of Valuation allowance

The following table summarizes the activity related to the valuation allowance for deferred tax assets (in thousands):

	Balance at		Additions		Additions
	Beginning of		Charged to		Charged to				Balance at
	Period		Expenses		Other Accounts		Deductions		End of Period
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
Year ended December 30, 2017	$	12,361	$	2,110	$	1,732	$	(9,685)	$	6,518

Schedule of activity related to gross unrecognized tax benefits

The following table summarizes the activity related to gross unrecognized tax benefits (in thousands):

	Year Ended
	December 28,		December 29,		December 30,
	2019		2018		2017
Beginning balance	$	2,036	$	3,187	$	3,054
Additions based on tax positions related to current year		436		630		456
Additions based on tax positions related to prior years		—		115		114
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)		(437)
Ending balance	$	2,276	$	2,036	$	3,187