Taxes

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

Taxes

13.Taxes

Income Taxes

The components of the Company’s consolidated (loss) income before income taxes consist of the following:

	Fiscal Year Ended
	December 30,			December 31,			January 1,
	2023			2022			2022
Domestic	$	(222,260	)	$	(376,710	)	$	(27,451	)
Foreign		148,628			9,907			104,428
	$	(73,632	)	$	(366,803	)	$	76,977

The following table summarizes the Company’s consolidated provision for (benefit from) U.S. federal, state and foreign income taxes:

	Fiscal Year Ended
	December 30,			December 31,			January 1,
	2023			2022			2022
Current:
U.S. federal	$	1,330		$	12,426		$	117
State		1,947			3,446			1,055
Foreign		15,525			20,022			24,245
	$	18,802		$	35,894		$	25,417
Deferred:
U.S. federal	$	(12,419	)	$	(110,611	)	$	(8,510	)
State		4,263			(23,213	)		(9,589	)
Foreign		27,977			(12,005	)		2,534
	$	19,821		$	(145,829	)	$	(15,565	)
Total provision for (benefit from) income taxes	$	38,623		$	(109,935	)	$	9,852

The effective tax rates for the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022 were (52.5%), 30.0% and 12.8%, respectively. The difference between the U.S. federal statutory tax rate and the Company’s consolidated effective tax rate is as follows:

The Company’s effective tax rate for the fiscal year ended December 30, 2023 was impacted by the following items: (i) a $53,626 tax expense due to a valuation allowance and (ii) a $12,172 tax expense related to income earned in foreign jurisdictions at rates higher than the U.S. These expenses were partially offset by (i) a $9,441 tax benefit related to state tax and (ii) a $2,637 tax benefit related to foreign-derived intangible income (“FDII”).

The Company’s effective tax rate for the fiscal year ended December 31, 2022 was impacted by the following items: (i) a $45,748 tax benefit from a legal entity restructuring in connection with the Organizational Realignment (as defined below), which resulted in a reversal of certain deferred tax liabilities, and (ii) a $4,450 tax benefit related to FDII. These benefits were partially offset by (i) a $27,108 tax expense from a valuation allowance established to offset certain deferred tax assets due to the uncertainty of realizing future tax benefits from its interest expense carryforwards, (ii) a $2,245 tax expense related to income earned in foreign jurisdictions at rates higher than the U.S., and (iii) a $1,732 tax expense related to tax shortfalls from stock compensation.

The Company’s effective tax rate for the fiscal year ended January 1, 2022 was impacted by the following items: (i) a $6,347 tax benefit related to a decrease in the applicable state tax rate on certain deferred income, (ii) a $3,548 tax benefit related to tax windfalls from stock compensation, and (iii) a $1,560 tax benefit due to the reversal of a valuation allowance related to certain non-U.S. net operating losses that are now expected to be realized. These benefits were partially offset by $6,888 of tax expense related to income earned in foreign jurisdictions at rates higher than the U.S.

	Fiscal Year Ended
	December 30,			December 31,			January 1,
	2023			2022			2022
U.S. federal statutory tax rate		21.0	%		21.0	%		21.0	%
State income taxes (net of federal benefit)		12.8	%		3.8	%		(1.8	%)
Research and development credit		3.0	%		0.4	%		(1.8	%)
Tax windfall/shortfall on share-based awards		(0.9	%)		(0.5	%)		(4.6	%)
Reserves for uncertain tax positions		0.0	%		0.0	%		0.2	%
Tax rate changes		(0.1	%)		0.3	%		(8.1	%)
Executive compensation limitation		(1.4	%)		(0.2	%)		1.8	%
FDII		3.6	%		1.2	%		0.0	%
Change in valuation allowance		(72.8	%)		(7.1	%)		(2.0	%)
Impact of foreign operations		(16.5	%)		(1.6	%)		8.9	%
Reversal of certain deferred tax liabilities		0.0	%		12.5	%		0.0	%
Nondeductible costs		(1.3	%)		0.0	%		0.0	%
Other		0.1	%		0.2	%		(0.8	%)
Total effective tax rate		(52.5	%)		30.0	%		12.8	%

The deferred tax assets and liabilities recorded on the Company’s consolidated balance sheets are as follows:

	December 30, 2023			December 31, 2022
Interest expense disallowance	$	76,350		$	54,259
Operating lease liabilities		16,174			22,076
Operating loss carryforwards		12,446			10,102
Provision for estimated expenses		3,657			2,815
Salaries and wages		13,489			10,282
Share-based compensation		14,920			15,190
Other comprehensive income		3,833			1,841
Other		4,287			4,211
Less: valuation allowance		(89,801	)		(35,818	)
Total deferred tax assets	$	55,355		$	84,958
Goodwill and intangible assets	$	(47,323	)	$	(54,588	)
Operating lease assets		(13,285	)		(19,270	)
Depreciation		(12,749	)		(13,498	)
Termination fee		(3,408	)		—
Prepaid expenses		(900	)		(440	)
Total deferred tax liabilities	$	(77,665	)	$	(87,796	)
Net deferred tax liabilities	$	(22,310	)	$	(2,838	)

As of December 30, 2023 and December 31, 2022, the Company had primarily foreign and state net operating loss carryforwards of approximately $107,415 and $82,184, respectively, some of which have an unlimited carryforward period, while others expire in various years beginning in fiscal 2024. The Company maintains a full valuation allowance on its state and certain foreign net operating loss carryforwards as it is deemed more likely than not that such losses will not be realized. In fiscal 2022, the Company established a $27,108 valuation allowance on its business interest expense carryforwards. As of December 30, 2023, the Company increased the valuation allowance on its business interest expense carryforwards by $20,268 and established a $30,331 valuation allowance on its remaining U.S. deferred tax assets.

The Company does not assert its $91,792 of undistributed foreign earnings as of December 30, 2023 are permanently reinvested. The Company has considered whether there would be any potential future costs of not asserting indefinite reinvestment and does not expect such costs to be significant.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Fiscal Year Ended
	December 30,			December 31,			January 1,
	2023			2022			2022
Balance at beginning of year	$	611		$	1,055		$	851
Increases related to tax positions taken in current year		—			145			196
Increases related to tax positions taken in prior years		9			8			260
Reductions related to tax positions taken in prior years		(9	)		(95	)		(199	)
Reductions related to settlements with tax authorities		—			(273	)		—
Reductions related to lapse of statutes of limitations		—			(206	)		—
Effects of foreign currency translation		2			(23	)		(53	)
Balance at end of year	$	613		$	611		$	1,055

At December 30, 2023, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $509.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. At December 30, 2023, with few exceptions, the Company was no longer subject to U.S. federal, state or local income tax examinations by tax authorities for fiscal years prior to 2020, or non-U.S. income tax examinations by tax authorities for fiscal years prior to 2017.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company had $83 and $83 of accrued interest and penalties at December 30, 2023 and December 31, 2022, respectively. The Company recognized $0, $(60) and $54 of income tax expense in interest and penalties during the fiscal years ended December 30, 2023, December 31, 2022 and January 1, 2022, respectively. It is reasonably possible that within the next twelve months the Company’s unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce unrecognized tax benefits by $126.

Non-Income Tax Matters

The Internal Revenue Service (the “IRS”) notified the Company of certain penalties assessed related to the annual disclosure and reporting requirements of the Affordable Care Act. The Company is in the process of appealing this determination and does not believe it has any liability with respect to this matter. Until the appeals process is complete, the IRS will maintain a federal tax lien which is currently limited to certain IRS refunds due to the Company.