Income Taxes

12 Months Ended

Dec. 27, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 6 – Income Taxes

Income (loss) before tax was as follows:

	Year Ended
	December 27, 2024		December 29, 2023		December 30, 2022
United States	$	(58,245)	$	(69,040)	$	(353)
Foreign	40,191		37,962		75,683
Income (loss) before tax	$	(18,054)	$	(31,078)	$	75,330

Significant components of income tax expense consist of the following:

	Year Ended
	December 27, 2024		December 29, 2023		December 30, 2022
Current:
Federal	$	(115)	$	(56)	$	1,605
State	585		16		912
Foreign	3,078		2,633		3,224
Total current tax expense	3,548		2,593		5,741
Deferred:
Federal	326		8,471		(2,604)
State	62		1,529		(45)
Foreign	(1,170)		(686)		(566)
Total deferred tax expense (benefit)	(782)		9,314		(3,215)
Income tax expense	$	2,766	$	11,907	$	2,526

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense consist of the following:

	Year Ended
	December 27, 2024		December 29, 2023		December 30, 2022
Effective rate reconciliation:
U.S. federal tax expense	$	(3,791)	$	(6,527)	$	15,819
State income taxes, net	(781)		(1,713)		752
Permanent items	1,508		928		248
Foreign rate differential	(745)		(1,190)		(2,595)
Tax holiday	(7,078)		(4,962)		(11,676)
Credits	(1,683)		(1,661)		(1,882)
Tax contingencies	475		(331)		462
Share-based compensation	(441)		(122)		166
Withholding tax	815		717		1,170
Other, net	244		(763)		112
Valuation allowance	14,243		27,531		(50)
Income tax expense	$	2,766	$	11,907	$	2,526

Deferred income tax assets and liabilities consist of the following:

	December 27, 2024		December 29, 2023
Deferred tax assets:
Inventory	$	8,701	$	7,962
Share-based compensation	3,103		3,563
Accrued payroll	1,580		1,306
Net operating loss carryforwards	16,817		8,092
Tax credits	6,678		4,987
Interest carryforwards	6,298		4,099
Capitalized research expenses	9,838		7,096
Intercompany interest	2,906		2,758
Operating lease liabilities	11,140		9,379
Other assets	534		663
Deferred tax assets	67,595		49,905
Valuation allowance	(42,281)		(28,038)
Total deferred tax assets	25,314		21,867
Deferred tax liabilities:
Intangible assets	(5,438)		(3,631)
Property, plant and equipment	(5,851)		(6,743)
Operating lease right-of-use assets	(10,890)		(9,149)
Other liabilities	(374)		(365)
Total deferred tax liabilities	(22,553)		(19,888)
Net deferred tax asset	$	2,761	$	1,979

At December 27, 2024, we had federal, state, and foreign net operating loss carryforwards ("NOLs") of $66.1 million, $42.4 million and $2.0 million, respectively. The federal NOLs carry forward indefinitely. The state and foreign NOLs, if not utilized, will begin to expire in 2028 and 2034, respectively. At December 27, 2024, we had federal and state research and development credits of $2.5 million and $0.3 million, respectively, which, if not utilized, will begin to expire in 2042 and 2029, respectively. At December 27, 2024, we had foreign tax credits of $2.1 million, which, if not utilized, will begin to expire in 2032.

We have determined the amount of our valuation allowance based on our estimates of taxable income by jurisdiction in which we operate over the periods in which the related deferred tax assets will be recoverable. As of December 27, 2024, we believe it is not more-likely-than-not that our U.S. entities will generate sufficient taxable income to offset reversing deductible timing differences and to fully utilize carryforward tax attributes. Accordingly, we have recorded a valuation allowance against U.S. federal and state deferred tax assets, net of deferred tax liabilities related to indefinite-lived intangible assets for which no future realization can be expected.

We were granted a tax holiday for our Singapore operations, which expires in 2026. The net impact of the tax holiday in Singapore as compared to the Singapore statutory rate was a benefit of $7.1 million, $5.0 million, and $11.7 million during 2024, 2023, and 2022, respectively. Our income tax fluctuates based on the geographic mix of earnings and is calculated quarterly based on actual results pursuant to ASC Topic 740‑270.

We recognize tax benefits from uncertain tax positions when it is more likely than not that the position will be sustained upon examination. As of December 27, 2024, we had reserves of $3.3 million related to these uncertain tax positions, which are included in the balance of other non-current liabilities on the accompanying consolidated balance sheet. If recognized, $1.5 million of this amount would impact our effective tax rate. We expect a decrease to this reserve of $0.2 million over the next 12 months.

We recognize estimated accrued interest and penalties related to these unrecognized tax benefits in income tax expense. In 2024, we recognized a net increase of $0.2 million in estimated interest and penalties. At December 27, 2024, we had approximately zero and $0.6 million of accrued estimated interest and penalties, which are excluded from the unrecognized tax benefits table below.

The following table summarizes the activity related to our unrecognized tax benefits:

	Unrecognized tax benefits
Balance at December 31, 2021	$	2,995
Increase related to current year tax positions	689
Decrease in tax positions related to lapse of statute of limitations	(89)
Balance at December 30, 2022	3,595
Increase related to current year tax positions	488
Decrease in tax positions related to lapse of statute of limitations	(10)
Decrease in tax positions related to settlements	(916)
Balance at December 29, 2023	3,157
Increase related to current year tax positions	435
Decrease in tax positions related to lapse of statute of limitations	(336)
Balance at December 27, 2024	$	3,256

We assert indefinite reinvestment of our U.S. and Netherlands unremitted earnings. With regard to these unremitted earnings, we have not, nor do we anticipate the need to repatriate funds from the U.S. to the Netherlands or from the Netherlands to the Cayman entity to satisfy liquidity needs. Determination of the amount of unrecognized withholding tax liability related to the indefinitely reinvested earnings is not practicable.

Our three major filing jurisdictions are the United States, Singapore, and Malaysia. We are no longer subject to U.S. Federal examination for tax years ending before 2021, to state examinations before 2020, or to foreign examinations before 2020. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward. As of December 27, 2024, we were under examination by the California tax authorities for fiscal years 2020-2022.