Income Taxes

3 Months Ended

Mar. 29, 2025

Income Tax Disclosure [Abstract]

Income Taxes

8.Income Taxes

The Company’s effective tax rate for the three months ended March 29, 2025 was (45.1%) compared to (19.0%) for the three months ended March 30, 2024. The effective tax rate for interim periods is determined using an annual effective tax rate, adjusted for discrete items. The forecasted full-year fiscal 2025 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 March 29, 2025 resulted in an income tax expense of $22,575, which is mostly reflected in income taxes payable on the Company’s consolidated balance sheet and consolidated statement of cash flows.

For the three months ended March 29, 2025, 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 a tax expense related to the Base Erosion and Anti-Abuse Tax, partially offset by a tax benefit related to foreign-derived intangible income (“FDII”). 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 first quarter of fiscal 2025. For the three months ended March 30, 2024, the difference between the U.S. federal statutory tax rate and the Company’s consolidated effective tax rate was primarily due to an increase in valuation allowance against U.S. deferred tax assets. In addition, the effective tax rate was impacted by a tax benefit related to FDII.