Taxes

9 Months Ended

Sep. 28, 2024

Income Tax Disclosure [Abstract]

Taxes

9.Taxes

Income Taxes

The Company’s effective tax rates for the three and nine months ended September 28, 2024 were 37.2% and (3.4%), respectively, compared to (727.7%) and 44.0% for the three and nine months ended September 30, 2023, respectively. The effective tax rate for interim periods is determined using an annual effective tax rate, adjusted for discrete items. The forecasted full-year fiscal 2024 tax expense, which included an increase in valuation allowance against U.S. deferred tax assets, in relation to the Company’s forecasted full-year pretax loss (albeit minimal), drove the unusually high negative annual effective tax rate. Applying this negative annual effective tax rate to pretax loss for the three months ended September 28, 2024 resulted in an income tax benefit and applying this negative annual effective tax rate to the pretax loss for the nine months ended September 28, 2024 resulted in an income tax expense. In addition, for the nine months ended September 28, 2024, the effective tax rate was impacted by approximately $2,748 of tax expense recorded for an out-of-period income tax adjustment and $2,181 of tax expense from a valuation allowance established to offset certain non-U.S. deferred tax assets due to the uncertainty of realizing future tax benefits. The adoption of the Organization for Economic Cooperation and Development’s global tax reform initiative, which introduces a global minimum tax of 15% applicable to large multinational corporations, did not have an impact on the Company’s effective tax rates for the three and nine months ended September 28, 2024.

For the nine months ended September 30, 2023, the difference between the U.S. federal statutory tax rate and the Company’s consolidated effective tax rate was primarily due to the valuation allowance noted above. In addition, the effective tax rate was impacted by tax expense from income earned in foreign jurisdictions, partially offset by a tax benefit related to foreign-derived intangible income.

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 appealed this determination, and in the third quarter of fiscal 2024, the penalties were fully abated and the federal tax lien maintained by the IRS during the appeals process was lifted.