Income Taxes (Tables)

12 Months Ended

Jan. 27, 2019

Schedule of regional income before income taxes

The Company's regional income before income taxes is as follows:



	Fiscal Year Ended
(in thousands)	January 27, 2019			January 28, 2018			January 29, 2017
Domestic	$	(20,211	)	$	(14,421	)	$	(19,602	)
Foreign	83,309			74,292			92,662
Total	$	63,098		$	59,871		$	73,060

Schedule of components of income tax expense

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



	Fiscal Year Ended
(in thousands)	January 27, 2019			January 28, 2018			January 29, 2017
Current income tax provision
Federal	$	(147	)	$	2,108		$	—
State	—			—			—
Foreign	21,753			13,442			16,034
Subtotal	21,606			15,550			16,034
Deferred income tax (benefit) provision
Federal	(25,367		)	7,701			107
State	—			—			—
Foreign	3,677			(60		)	2,258
Subtotal	(21,690		)	7,641			2,365
(Benefit) provision for income taxes	$	(84	)	$	23,191		$	18,399

Schedule of income tax reconciliation

The (benefit) provision for income taxes reconciles to the amount computed by applying the statutory federal rate to income before taxes as follows:



	Fiscal Year Ended
(in thousands)	January 27, 2019				January 28, 2018				January 29, 2017
Federal income tax at statutory rate	$	13,223			$	20,222			$	25,571
State income taxes, net of federal benefit	(55		)		(159		)		—
Foreign taxes differential	2,910				(8,698		)		(12,074		)
Tax credits generated	(3,344		)		(3,278		)		(2,864		)
Changes in valuation allowance	(23,029		)		(41,911		)		5,578
Non-taxable gain on sale	—				—				(2,978		)
Changes in uncertain tax positions	2,219				1,538				1,047
Equity compensation	1,849				(8,333		)		2,553
Permanent differences	—				264				448
GILTI and Subpart F income	1,164				299				266
Impact of US tax reform	1,904			⁽¹⁾	65,442			⁽²⁾	—
Other	3,075				(2,195		)		852
(Benefit) provision for income taxes	$	(84	)		$	23,191			$	18,399

⁽¹⁾Impact of US tax reform for fiscal year 2019 includes a tax benefit from overall reduction to transition tax of approximately $5.0 million, and a tax expense from reduction to foreign tax credits of approximately $6.9 million. During fiscal year 2019, the Company continues to maintain a valuation allowance against foreign tax credits. The transition tax, net of deferreds, resulted in no current income tax payable.

⁽²⁾ Impact of US tax reform for fiscal year 2018 includes $66.5 million of expense due to the estimated impact of the transition tax, net of foreign tax credits generated.

Schedule of components of deferred tax assets and liabilities

The components of the net deferred income tax assets and liabilities at January 27, 2019 and January 28, 2018 are as follows:



(in thousands)	January 27, 2019			January 28, 2018
Non-current deferred tax asset:
Inventory reserve	4,984			2,406
Bad debt reserve	17			659
Accrued service fees	—			306
Foreign tax credits	2,996			9,987
Research credit carryforward	6,693			11,707
NOL carryforward	8,773			8,326
Payroll and related accruals	8,133			7,344
Share-based compensation	14,150			9,282
Foreign pension deferred	832			477
Accrued sales reserves	763			—
Other deferred assets	1,031			1,847
Valuation allowance	(18,912		)	(41,050		)
Total non-current deferred tax asset	29,460			11,291
Non-current deferred tax liabilities:
Goodwill and other intangibles	(3,227		)	(5,844		)
Property, plant and equipment	(6,482		)	(4,955		)
Repatriation of foreign earnings	(8,158		)	(10,427		)
Other non-current deferred tax liabilities	(592		)	(511		)
Total non-current deferred tax liabilities	(18,459		)	(21,737		)
Net deferred tax assets (liabilities)	$	11,001		$	(10,446	)

Summary of changes in the valuation allowance

Changes in the valuation allowance for the three years ended January 27, 2019 are summarized in the table below:



	Fiscal Year Ended
(in thousands)	January 27, 2019			January 28, 2018			January 29, 2017
Beginning balance	$	41,050		$	82,961		$	77,383
Additions	152			74			5,578
Releases	(22,290		)	(41,985		)	—
Ending balance	$	18,912		$	41,050		$	82,961

Schedule of gross unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (before federal impact of state items) is as follows:



	Fiscal Year Ended
(in thousands)	January 27, 2019			January 28, 2018
Beginning balance	$	16,059		$	11,452
Additions based on tax positions related to the current year	2,642			5,789
Reductions for tax positions of prior years, net	—			(1,182		)
Reductions for settlements with tax authorities	(408		)	—
Ending balance	$	18,293		$	16,059

Schedule of liability for uncertain tax positions

The liability for UTP is reflected on the Balance Sheets as follows:



	Fiscal Year Ended
(in thousands)	January 27, 2019		January 28, 2018
Deferred tax assets - non-current	$	12,492	$	12,135
Other long-term liabilities	4,479		3,924
Total accrued taxes	$	16,971	$	16,059