Income Taxes

3 Months Ended

Sep. 27, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure

6. Income Taxes

The Company recognized an income tax expense of $7.2 million and $20.4 million on losses from continuing operations before income taxes of $19.0 million and $114.8 million for the three and nine months ended September 27, 2024 (Successor), respectively. This resulted in an effective tax rate of negative 37.9% and negative 17.8%, respectively. The effective tax rate is lower than the Irish statutory tax rate of 12.5% primarily due to the impact of valuation allowances recorded for current year interest limitations, the mix of pretax earnings in various jurisdictions, and remaining effects of adoption of fresh-start accounting as a result of emergence from the 2023 Bankruptcy Proceedings for both periods.

The Company recognized an income tax expense of $10.8 million and $508.1 million on losses from continuing operations before income taxes of $1,714.1 million and $2,213.9 million for the three and nine months ended September 29, 2023 (Predecessor), respectively. This resulted in an effective tax rate of negative 0.6% and negative 23.0%, respectively. For the three months ended September 29, 2023 (Predecessor), the effective tax rate is lower than the Irish statutory tax rate of 12.5% primarily due to the impact of the mix of pretax earnings in various jurisdictions. For the nine months ended September 29, 2023 (Predecessor), the effective tax rate is lower than the Irish statutory tax rate of 12.5% primarily due to the impact of valuation allowances recorded on the beginning of the year deferred tax assets as a result of the Company’s substantial doubt about the ability to continue as a going concern and the mix of pretax earnings in various jurisdictions.

During the nine months ended September 27, 2024 (Successor), net cash payments for income taxes were $4.4 million related to operational activity. During the nine months ended September 29, 2023 (Predecessor), net cash refunds for income taxes were $136.3 million, including refunds of $141.6 million received as a result of provisions in the CARES Act and net payments of $5.3 million related to operational activity.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) released the Global Anti-Base Erosion (“GloBE”) Model Rules (“Pillar Two”) providing a legislative framework for the Income Inclusion Rule and the Under-Taxed Payment Rule (“UTPR”). Pillar Two is designed to ensure that large multinational enterprise groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate, principally creating a 15% minimum global effective tax rate. On December 15, 2022, the E.U. member states, as well as many other countries, adopted a directive implementing the Pillar Two global minimum tax rules. On December 20, 2022, the OECD released three guidance documents related to Pillar Two. These documents included guidance on safe harbors and penalty relief and consultation papers on the GloBE Information Return and Tax Certainty for the GloBE rules. A number of jurisdictions have transposed the directive into national legislation with the rules to be applicable for fiscal years beginning on or after December 31, 2023, with the exception of the UTPR which is to be applicable for fiscal years beginning on or after December 31, 2024. As the Company's fiscal year end was December 29, 2023, Pillar Two is not effective until the Company’s fiscal year ending December 25, 2025. The Company is closely monitoring developments and is evaluating the impacts these new rules will have on its tax rate, including the eligibility to qualify for the safe harbor rules.

The Company's unrecognized tax benefits, excluding interest, totaled $29.7 million and $33.3 million as of September 27, 2024 (Successor) and December 29, 2023 (Successor), respectively. Within the next twelve months, the unrecognized tax benefits and the related interest and penalties are not expected to change significantly.