Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company regularly reviews its tax positions in each significant taxing jurisdiction in the process of evaluating its unrecognized tax benefits. The Company makes adjustments to its unrecognized tax benefits when: (i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position; (ii) a tax position is effectively settled with a tax authority at a differing amount; and/or (iii) the statute of limitations expires regarding a tax position. The tabular reconciliation of the total amounts of unrecognized tax benefits is as follows for the fiscal years ended:
The Company classifies interest and penalties as a component of income tax expense. At December 29, 2019 and December 30, 2018, the Company had accrued interest and penalties of $4.1 million and $2.5 million, respectively. During fiscal years 2019, 2018 and 2017, the Company recognized a net expense (benefit) of $1.6 million, $0.4 million and $(0.3) million, respectively, for interest and penalties in its total tax provision which includes settlements and statutes of limitations that had lapsed. At December 29, 2019, the Company had gross tax effected unrecognized tax benefits of $35.5 million, of which $33.8 million, if recognized, would affect the continuing operations effective tax rate. The remaining amount, if recognized, would affect discontinued operations. The Company believes that it is reasonably possible that approximately $2.4 million of its uncertain tax positions at December 29, 2019, including accrued interest and penalties, and net of tax benefits, may be resolved over the next twelve months as a result of lapses in applicable statutes of limitations and potential settlements. Various tax years after 2010 remain open to examination by certain jurisdictions in which the Company has significant business operations, such as Finland, Germany, Italy, Netherlands, Singapore, China and the United States. The tax years under examination vary by jurisdiction. During fiscal year 2019, the Company recorded net discrete income tax benefit of $23.4 million, of which $12.3 million was a result of a valuation allowance reversal, $4.9 million related to the recognition of excess tax benefits on stock compensation, $6.7 million related to provision to return adjustments, and $3.7 million was a result of tax elections made during fiscal year 2019. The preceding discrete benefits were partially offset by $2.7 million expense related to the one-time transition tax under the Tax Cut and Jobs Act (the "Tax Act") and additional discrete expense of $1.4 million related to other tax matters. During fiscal years 2018 and 2017, the Company recorded net discrete income tax benefits of $8.1 million and income tax expense of $98.6 million, respectively. The $8.1 million tax benefit in fiscal year 2018 was primarily due to a discrete benefit of $7.2 million related to the recognition of excess tax benefits on stock compensation, along with an additional discrete benefit of $2.0 million as a result of the Tax Act, partially offset by $1.1 million expense related to other tax matters. The $98.6 million of tax expense in fiscal year 2017 was primarily related to $106.5 million expense as a result of the Tax Act, partially offset by discrete benefits of $5.1 million related to the recognition of excess tax benefits on stock compensation and $2.8 million related to other tax matters. The components of income from continuing operations before income taxes were as follows for the fiscal years ended:
On a U.S. income tax basis, the Company has reported significant taxable income over the three-year period ended December 29, 2019. The Company has utilized tax attributes to minimize cash taxes paid on that taxable income. The components of the provision for income taxes on continuing operations were as follows:
The total provision for (benefit from) income taxes included in the consolidated financial statements is as follows for the fiscal years ended:
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision is as follows for the fiscal years ended:
The variation in the Company's effective tax rate for each year is primarily a result of the recognition of earnings in foreign jurisdictions, predominantly Singapore, Finland and The Netherlands, which are taxed at rates lower than the U.S. federal statutory rate, resulting in a benefit from income taxes of $16.7 million in fiscal year 2019, $18.7 million in fiscal year 2018 and $55.9 million in fiscal year 2017. These amounts include $10.4 million in fiscal year 2019, $10.3 million in fiscal year 2018 and $10.1 million in fiscal year 2017 of benefits derived from tax holidays in China and Singapore. The effect of these benefits derived from tax holidays on basic and diluted earnings per share for fiscal year 2019 was $0.09 and $0.09, respectively, for fiscal year 2018 was $0.09 and $0.09, respectively, and for fiscal year 2017 was $0.09 and $0.09, respectively. The tax holiday in China is renewed every three years. The Company expects to renew the tax holiday of one of its subsidiaries in China that expired in fiscal year 2019. The tax holiday in one of the Company's subsidiaries in Singapore is scheduled to expire in fiscal year 2023. The tax effects of temporary differences and attributes that gave rise to deferred income tax assets and liabilities as of December 29, 2019 and December 30, 2018 were as follows:
The components of net deferred tax liabilities as of December 29, 2019 and December 30, 2018 were recognized in the consolidated balance sheets as follows:
At December 29, 2019, for income tax return purposes, the Company had U.S. federal net operating loss carryforwards of $33.6 million, state net operating loss carryforwards of $213.8 million, foreign net operating loss carryforwards of $408.7 million, state tax credit carryforwards of $6.7 million, general business tax credit carryforwards of $5.7 million, and foreign tax credit carryforwards of $0.1 million. These are subject to expiration in years ranging from 2020 to 2038, and without expiration for certain foreign net operating loss carryforwards and certain state credit carryforwards. Valuation allowances take into consideration limitations imposed upon the use of the tax attributes and reduce the value of such items to the likely net realizable amount. The Company regularly evaluates positive and negative evidence available to determine if valuation allowances are required or if existing valuation allowances are no longer required. Valuation allowances have been provided on state net operating loss and state tax credit carryforwards and on certain foreign tax attributes that the Company has determined are not more likely than not to be realized. The decrease in the valuation allowance of $13.6 million in fiscal year 2019 is primarily due to the reversal of $12.3 million of valuation allowance related to the utilization of net operating loss carryforwards by some of the Company's non-U.S. subsidiaries. The components of net deferred tax (liabilities) assets as of December 29, 2019 and December 30, 2018 were as follows:
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