Income Taxes

12 Months Ended

Nov. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 15—INCOME TAXES:

The sources of income before the provision for income taxes are as follows:

	Fiscal Years Ended November 30,
	2019		2018		2017
			(As adjusted)		(As adjusted)
United States	$	204,651	$	195,058	$	255,830
Foreign		473,052		261,519		207,273
	$	677,703	$	456,577	$	463,103

Provision for income taxes consists of the following:

	Fiscal Years Ended November 30,
	2019			2018			2017
				(As adjusted)			(As adjusted)
Current tax provision:
Federal	$	71,376		$	113,243		$	105,879
State		14,421			20,263			17,900
Foreign		109,383			70,162			65,000
	$	195,180		$	203,668		$	188,779
Deferred tax provision (benefit):
Federal	$	(20,166	)	$	(30,334	)	$	(17,005	)
State		(1,389	)		(4,836	)		(1,448	)
Foreign		3,366			(11,902	)		(7,463	)
	$	(18,189	)	$	(47,072	)	$	(25,916	)
Total tax provision	$	176,991		$	156,596		$	162,863

On December 22, 2017, Public Law 115-97, informally referred to as the Tax Cuts and Jobs Act (the “TCJA”) was enacted into law. The TCJA provided for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that impacted corporate taxation requirements. The TCJA significantly revised the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%, implementing a territorial tax system, imposing a one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs (e.g., interest expense), among other things. During fiscal year 2018, the Company accounted for the impact of the TCJA resulting in additional income tax expense of $33,109. The significant components of this expense were (i) the one-time deemed repatriation tax on unremitted non-U.S. earnings and profits that were previously tax deferred and other tax impacts of the TCJA, which resulted in an increase in income tax expense, net of deductions and credits, of $59,823 and (ii) the remeasurement of net deferred tax liabilities at the lower enacted U.S. federal corporate tax rate, which resulted in a decrease of $26,714 in income tax expense.

The following presents the breakdown of net deferred tax liabilities:

	As of November 30,
	2019			2018
				(As adjusted)
Deferred tax assets	$	97,539		$	76,508
Deferred tax liabilities		(222,210	)		(206,916	)
Total net deferred tax liabilities	$	(124,671	)	$	(130,408	)

Net deferred tax liabilities consist of the following:

	As of November 30,
	2019			2018
				(As adjusted)
Assets:
Net operating losses	$	68,582		$	71,899
Accruals and other reserves		71,513			73,263
Unrealized losses on cash flow hedges		17,870			—
Inventory reserves		17,404			11,041
Depreciation and amortization		12,579			—
Share-based compensation expense		11,856			11,605
Allowance for doubtful accounts and sales return reserves		11,759			15,695
Tax credits		6,810			11,305
Deferred revenue		5,625			6,541
Intercompany payables/receivables		452			39,476
Foreign tax credit		296			15,456
Other		6,611			16,524
Gross deferred tax assets		231,357			272,805
Valuation allowance		(51,118	)		(61,840	)
Total deferred tax assets	$	180,239		$	210,965
Liabilities:
Intangible assets	$	(277,147	)	$	(310,092	)
Unremitted non-U.S. earnings		(27,771	)		(21,528	)
Depreciation and amortization		—			(1,669	)
Other		8			(8,084	)
Total deferred tax liabilities	$	(304,910	)	$	(341,373	)
Net deferred tax liabilities	$	(124,671	)	$	(130,408	)

The valuation allowance relates primarily to certain state and foreign net operating loss carry forward, foreign deferred items and state credits. The Company’s assessment is that it is not more likely than not that these deferred tax assets will be realized.

A reconciliation of the statutory United States federal income tax rate to the Company’s effective income tax rate is as follows: 

	Fiscal Years Ended November 30,
	2019			2018			2017
				(As adjusted)			(As adjusted)
Federal statutory income tax rate		21.0	%		22.2	%		35.0	%
State taxes, net of federal income tax benefit		1.5			2.4			2.9
Foreign taxes		(2.3	)		0.6			(3.2	)
Adjustments related to the TCJA		—			7.2			—
Global intangible low taxed income		1.6			—			—
Uncertain tax benefits		2.6			—			—
Tax on anticipated distributions from subsidiaries		1.0			—			—
Other		0.7			1.9			0.5
Effective income tax rate		26.1	%		34.3	%		35.2	%

The Company’s United States business has sufficient cash flow and liquidity to fund its operating requirements and the Company expects and intends that profits earned outside the United States will be fully utilized and reinvested outside of the United States with the exception for earnings of certain previously acquired foreign entities. The Company recorded deferred tax liabilities related to non-U.S. withholding taxes related to the earnings likely to be repatriated in the future.

As of November 30, 2019, the Company had approximately $1,430,100 of undistributed earnings of its non-U.S. subsidiaries for which it has not provided for non-U.S. withholding taxes and state taxes because such earnings are intended to be reinvested indefinitely in international operations. It is not practicable to determine the amount of applicable taxes that would be due if such earnings were distributed. Accordingly, the Company has not provisioned United States state taxes and foreign withholding taxes on non-U.S. subsidiaries for which the earnings are permanently reinvested.

As of November 30, 2019, the Company had net operating loss carry forward of approximately $28,900 and $36,700 for federal and state purposes, respectively. The federal net operating loss carry forward will start expiring in fiscal year ending November 30, 2021, if not used, and the state net operating loss carry forward will start expiring in fiscal year ending November 30, 2020, if not used. The Company also had approximately $134,200 of foreign net operating loss carry forward that will also start expiring in fiscal year ending November 30, 2020 if not used. In addition, the Company had approximately $3,000 of various federal and state income tax credit carry forwards that if not used, will begin expiring in fiscal year ending November 30, 2020. Utilization of the acquired loss carry forwards may be limited pursuant to Section 382 of the Internal Revenue Code of 1986.

The Company enjoys tax holidays in certain jurisdictions, primarily, China, Costa Rica, Nicaragua and the Philippines. The tax holidays provide for lower or zero rates of taxation and require various thresholds of investment and business activities in those jurisdictions. Certain tax holidays begin to expire in fiscal year 2020. The estimated range of tax benefits from the above tax holidays on diluted earnings per share for fiscal years 2019, 2018, and 2017 were approximately $0.06 to $0.07, $0.10 to $0.12 and $0.07 to $0.08, respectively.

The aggregate changes in the balances of gross unrecognized tax benefits, excluding accrued interest and penalties, during fiscal years 2019, 2018, and 2017 were as follows:

Balance as of November 30, 2016	$	32,774
Additions based on tax positions related to the current year		9,022
Additions for tax positions of prior years		231
Lapse of statute of limitations		(2,300	)
Changes due to translation of foreign currencies		179
Balance as of November 30, 2017		38,282
Additions based on tax positions related to the current year		8,173
Additions for tax positions of prior years and acquisition		10,763
Lapse of statute of limitations		(3,641	)
Changes due to translation of foreign currencies		398
Balance as of November 30, 2018		53,975
Additions based on tax positions related to the current year		15,569
Additions for tax positions of prior years and acquisition		9,067
Lapse of statute of limitations		(7,234	)
Changes due to translation of foreign currencies		(15	)
Balance as of November 30, 2019	$	71,362

The Company conducts business globally and files income tax returns in various U.S. and foreign tax jurisdictions. The Company is subject to continuous examination and audits by various tax authorities. Significant audits are underway in the Unites States, Canada and India. The Company is not aware of any material exposures arising from these tax audits or in other jurisdictions not already provided for.

Although timing of the resolution of audits and/or appeals is highly uncertain, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits as of November 30, 2019 will not materially change in the next twelve months. The Company is no longer subject to U.S. federal income tax audit for returns covering years through fiscal 2015. The Company is no longer subject to foreign or state income tax audits for returns covering years through 2003, and fiscal year 2002, respectively.

As of November 30, 2019, $71,362 of the total unrecognized tax benefits, net of federal benefit, would affect the effective tax rate, if realized. The Company’s policy is to include interest and penalties related to income taxes, including unrecognized tax benefits, within the provision for income taxes. As of November 30, 2019 and 2018, the Company had accrued $15,627 and $13,003, respectively, in income taxes payable related to accrued interest and penalties.