The Company's income tax (benefit) expense was $(62.6) million, $82.6 million and $214.8 million and the Company's effective income tax rate was 33.0%, 17.3% and 43.0% for the years ended November 29, 2020, November 24, 2019 and November 25, 2018, respectively.

On March 27, 2020, the CARES Act was signed into law in the United States. The CARES Act provides relief to U.S. Corporations through financial assistance programs and modifications to certain income tax provisions including temporary five-year net operating loss carryback provisions and a modification of interest deduction limitations.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Tax Act"), which significantly changed U.S. tax law. The Tax Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective on November 26, 2018. Beginning the first quarter of 2019, the Company's effective tax rate reflected a provision to tax Global Intangible Low-Taxed Income ("GILTI") of foreign subsidiaries and a tax benefit for Foreign Derived Intangible Income ("FDII"). In fiscal year 2020, no GILTI tax cost and FDII tax benefit reflected in the income tax benefit due to COVID 19 and losses incurred in many jurisdictions. In accordance with U.S. GAAP, the Company made an accounting policy election to account for the GILTI provision in the period in which it is incurred.

The increase in the effective tax rate in fiscal year 2020 as compared to fiscal year 2019 was driven by a significant decrease in income before income taxes and tax rate reconciling items as a percentage to income before income taxes. The increase in the effective tax rate was primarily attributable to a $26.1 million benefit from stock-based compensation exercises which includes state income taxes, and a $4.6 million benefit resulting from the carryback of U.S. net operating losses to tax years with a higher federal income tax rate as allowed under the CARES Act, offset with a $18.3 million tax charge for valuation allowance against deferred tax assets.

The decrease in the effective tax rate in fiscal year 2019 as compared to fiscal year 2018 was driven by a $143.4 million one-time tax charge in 2018 related to the enactment of the Tax Act. Included in the charge was $95.6 million related to re-measurement of deferred tax assets and liabilities, $37.5 million from a one-time U.S. transition tax on undistributed foreign earnings, and $10.3 million related to foreign and state tax costs associated with future remittances of undistributed earnings from foreign subsidiaries.


	Year Ended
	November 29, 2020				November 24, 2019				November 25, 2018

	(Dollars in thousands)
Income tax expense at U.S. federal statutory rate	$	(39,855)	21.0	%	$	100,293	21.0	%	$	111,755	22.4	%
State income taxes, net of U.S. federal impact	(5,246)		2.8	%	4,496		1.0	%	11,102		2.2	%
Change in valuation allowance	18,271		(9.6)	%	(81)		—	%	(9,239)		(1.9)	%
Impact of foreign operations(1)	(8,868)		4.7	%	7,132		1.5	%	(17,149)		(3.4)	%
Foreign-derived intangible income benefit ("FDII")	—		—	%	(11,918)		(2.5)	%	—		—	%
Reassessment of tax liabilities	(1,531)		0.7	%	(6,480)		(1.4)	%	(12,552)		(2.5)	%
Stock-based compensation	(22,332)		11.8	%	(15,730)		(3.3)	%	(10,715)		(2.1)	%

Other, including non-deductible expenses	1,547		(0.8)	%	4,892		1.0	%	(1,783)		(0.4)	%
Change in tax law	(4,628)		2.4	%	—		—	%	143,359		28.7	%
Total	$	(62,642)	33.0	%	$	82,604	17.3	%	$	214,778	43.0	%

___________

Impact of foreign operations. The tax benefit in fiscal year 2020 is primarily due to a decrease in foreign earnings as compared to fiscal year 2019 which reduced the U.S. tax cost from GILTI and branch operations. The tax rate benefit in fiscal year 2019 decreased as compared to fiscal year 2018 is primarily due to additional tax charges from foreign jurisdictions, Tax Act impacts (e.g. GILTI) and a lesser amount of excess tax benefit on actual and deemed repatriation of foreign earnings.

Change in valuation allowance. The $18.3 million tax charge in fiscal year 2020 is primarily due to net operating losses generated in the current year for which management concluded that it is more likely than not that such assets will not be realized. The $9.2 million tax benefit in fiscal year 2018 is primarily due to the release of valuation allowances on deferred tax assets of certain foreign subsidiaries, primarily in Japan where management concluded that it is more likely than not that such assets will be realized.

Reassessment of tax liabilities. The $6.5 million tax benefit in fiscal year 2019 is primarily attributable to finalization of state tax refund claims. The $12.6 million tax benefit in fiscal year 2018 is primarily attributable to finalization of a foreign audit.

Change in tax law. The $4.6 million tax benefit is comprised of a $38.5 million benefit for carrying back current year U.S. losses to prior years at a higher tax rate, partially offset by a $27.6 million write off of previously used foreign tax credits that will expire unutilized because of the aforementioned carryback. In addition, $6.3 million of foreign tax credits expired in 2020 due to the current year U.S. loss. The $143.4 million tax charge in 2018, from the enactment of the Tax Act, was comprised of a $95.6 million remeasurement of the Company's deferred tax assets and liabilities based on the lower rates at which they are expected to reverse in the future, a $37.5 million one-time U.S. transition tax on undistributed foreign earnings, and a $10.3 million charge related to foreign and state tax costs associated with the future remittance of undistributed earnings of foreign subsidiaries.


	Year Ended
	November 29, 2020		November 24, 2019		November 25, 2018

	(Dollars in thousands)
Domestic	$	(197,718)	$	120,692	$	151,229
Foreign	7,935		356,892		348,793
Total income before income taxes	$	(189,783)	$	477,584	$	500,022


	Year Ended
	November 29, 2020		November 24, 2019		November 25, 2018

	(Dollars in thousands)
U.S. Federal
Current	$	8,396	$	13,182	$	12,468
Deferred	(79,676)		(22,319)		126,210
	$	(71,280)	$	(9,137)	$	138,678
U.S. State
Current	$	978	$	(2,939)	$	6,447
Deferred	(6,435)		1,002		4,655
	$	(5,457)	$	(1,937)	$	11,102
Foreign
Current	$	23,228	$	87,324	$	61,605
Deferred	(9,133)		6,354		3,393
	$	14,095	$	93,678	$	64,998
Consolidated
Current	$	32,602	$	97,567	$	80,520
Deferred	(95,244)		(14,963)		134,258
Total income tax expense	$	(62,642)	$	82,604	$	214,778


	November 29, 2020		November 24, 2019

	(Dollars in thousands)
Deferred tax assets
Foreign tax credit carryforwards	$	232,164	$	157,379
State net operating loss carryforwards	16,054		10,070
Foreign net operating loss carryforwards	58,644		45,047
Employee compensation and benefit plans	102,846		141,489
Advance royalties	10,021		15,213
Accrued liabilities	32,304		24,648
Sales returns and allowances	30,740		22,494
Inventory	25,380		11,635
Property, plant and equipment	—		12,266
Unrealized foreign exchange gains or losses	18,665		5,527
Lease liability	251,285		—
Other	17,898		9,557
Total gross deferred tax assets	796,001		455,325
Less: Valuation allowance	(38,543)		(19,611)
Deferred tax assets, net of valuation allowance	757,458		435,714
Deferred tax liabilities
U.S. Branches	(25,330)		(27,134)
Residual tax liability on unremitted foreign earnings	(7,940)		(5,672)
Property, plant and equipment	(4,531)		—
Right of use asset	(227,054)		—
Total deferred tax liabilities	(264,855)		(32,806)
Total net deferred tax assets	$	492,603	$	402,908

Foreign net operating loss carryforwards. As of November 29, 2020, the Company had a deferred tax asset of $57.7 million for foreign net operating loss carryforwards of $227.8 million. Of these operating losses $103.8 million are subject to expiration through 2030. The remaining $124.0 million are available as indefinite carryforwards under applicable tax law.


	Valuation Allowance at November 24, 2019		Changes in Related Gross Deferred Tax Asset		Change / (Release)		Valuation Allowance at November 29, 2020

	(Dollars in thousands)
Foreign tax credit and U.S. state net operating loss carryforwards	$	2,540	$	5,508	$	—	$	8,048
Foreign net operating loss carryforwards and other foreign deferred tax assets	17,071		(4,847)		18,271		30,495
	$	19,611	$	661	$	18,271	$	38,543

At November 29, 2020, the Company's valuation allowance primarily related to its gross deferred tax assets for state and foreign net operating loss carryforwards which reduced such assets to the amount that will more likely than not be realized.

Unremitted earnings of certain foreign subsidiaries. The Company historically provided for U.S. income taxes on the undistributed earnings of foreign subsidiaries unless they were considered indefinitely reinvested outside the United States. The Company reevaluated its historic indefinite reinvestment assertion as a result of the enactment of the Tax Act and determined that any historical undistributed earnings through November 25, 2018 of foreign subsidiaries, as well as most of the additional undistributed earnings generated through November 2020, are no longer considered to be indefinitely reinvested. The deferred tax liability related to foreign and state tax costs associated with the future remittance of these undistributed earnings of foreign subsidiaries was $8.2 million.

As of November 29, 2020, the Company’s total gross amount of unrecognized tax benefits was $32.3 million, of which $28.8 million could impact the effective tax rate, if recognized, as compared to November 24, 2019, when the Company’s total gross amount of unrecognized tax benefits was $36.6 million, of which $33.1 million could have impacted the effective tax rate, if recognized.


	November 29, 2020		November 24, 2019

	(Dollars in thousands)
Unrecognized tax benefits beginning balance	$	36,559	$	26,594
Increases related to current year tax positions	1,575		2,432
Increases related to tax positions from prior years	262		3,696
Decreases related to tax positions from prior years	(889)		(3,222)
Settlement with tax authorities	(4,322)		7,119
Lapses of statutes of limitation	(446)		(45)
Other, including foreign currency translation	(453)		(15)
Unrecognized tax benefits ending balance	$	32,286	$	36,559

The Company evaluates all domestic and foreign audit issues and believes that it is reasonably possible that total gross unrecognized tax benefits could decrease by as much as $1.1 million within the next twelve months.