XML 35 R22.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income (loss) before income taxes, excluding loss for noncontrolling interests, consists of the following:
December 30, 2022December 31, 2021December 25, 2020
Domestic$(3,866)$(44,650)$(26,998)
Foreign(6,219)1,606 (2,237)
Total$(10,085)$(43,044)$(29,235)

The components of income tax benefit for the years ended December 30, 2022, December 31, 2021 and December 25, 2020, were as follows:
December 30, 2022December 31, 2021December 25, 2020
Current
Federal$2,794 $— $— 
State2,289 1,005 96 
Foreign1,110 330 976 
Total
6,193 1,335 1,072 
Deferred
Federal(5,954)(5,708)(8,778)
State(1,790)(1,963)3,756 
Foreign92 (306)(401)
Total(7,652)(7,977)(5,423)
Income tax benefit$(1,459)$(6,642)$(4,351)
The tax effects of temporary differences and carryforwards that gave rise to deferred tax assets and liabilities as of December 30, 2022 and December 31, 2021, are as follows:

20222021
Deferred Tax Assets
Net operating loss$3,845 $17,815 
Interest carryforward7,793 8,442 
Accrued liabilities and reserves14,545 14,864 
Uniform capitalization593 352 
Capital loss carryforward8,719 8,719 
R&D credits17,296 17,923 
Deferred revenue3,422 3,724 
Depreciable property1,690 1,661 
Stock compensation8,020 4,294 
Section 174 research and expenditures18,046 — 
Other— 746 
Total deferred tax assets83,969 78,540 
Valuation allowance(15,554)(15,044)
Total deferred tax assets, net of valuation allowance68,415 63,496 
Deferred Tax Liabilities
Amortization of intangibles(93,489)(96,952)
Amortization of goodwill(17,072)(13,401)
Transaction Costs(55)(219)
Other(321)— 
Total deferred tax liabilities(110,937)(110,572)
Net deferred tax liabilities$(42,522)$(47,076)

The components of the Company’s net deferred tax liabilities as of December 30, 2022 and December 31, 2021, are as follows:
December 30, 2022December 31, 2021
Domestic deferred tax liabilities$(40,505)$(48,555)
Foreign deferred tax liabilities(3,010)— 
Foreign deferred tax assets993 1,479 
Net deferred tax liabilities$(42,522)$(47,076)

The Company’s deferred tax assets related to net operating losses and credits are shown net of their related unrecognized tax benefit.

Significant judgment is required in determining the Company’s provision for income taxes and recording valuation allowances against deferred tax assets. In evaluating the ability to recover its deferred tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies.

The Company determined, based on the available evidence, that it is uncertain whether certain of its jurisdictions will generate sufficient future taxable income and of the correct character to recognize certain of these deferred tax assets. As a result, the Company’s deferred tax asset for net operating losses, capital loss carryforwards and credits reflect a valuation allowance of $15,554 and $15,044 as of December 30, 2022 and December 31, 2021, respectively.

Given its overall deferred tax liability position, the Company expects to fully utilize its U.S. federal and state net operating loss carryforward balances with the exception of a portion of the Utah state net operating loss. However, the
Company expects a portion of their U.S. federal research and development credits to expire unused in future years along with all of their remaining state research and equipment credits. A partial valuation allowance has been established for the portion of credits expected to expire unused. The Company will continue to maintain a full valuation allowance against the foreign tax credit carryovers. In 2020, the Company sold the stock of their fully owned subsidiary, Autonomic Controls, Inc., for $1,104, incurring a capital loss of $35,039 for tax purposes. The Company has determined the capital loss will not be utilized due to insufficient capital gains. A full valuation allowance has been recorded against this asset for both federal and state.

Net operating loss and tax credit carryforwards as of December 30, 2022 are as follows (gross of valuation allowance and uncertain tax positions):

AmountExpiration Years
Net operating losses, state$39,345 2023-2041
Net operating losses, state$750 Indefinite
Net operating losses, foreign$8,435 2023-2026
Net operating losses, foreign$643 Indefinite
Tax credit carryforwards, federal$21,548 2023-2042
Tax credit carryforwards, state$1,833 2023-2030
Capital loss carryforwards, federal$35,039 2025
Capital loss carryforwards, state$22,640 2025

The Company has performed Section 382 analyses to determine whether it experienced one or more ownership changes, as defined by Section 382, during the analysis period (the acquisition date in 2017 through the IPO effective date in July 2021) as well as other ownership changes. While an annual limitation does exist related to the net operating losses and credits carried forward, the Company does not anticipate that this limitation will cause any net operating losses and credits to expire before their utilization. U.S. Federal net operating losses incurred after 2017 are subject to an 80% limitation on taxable income.

The Company recorded gross unrecognized tax benefit of $591, $161 and an expense of $187 during the years ended December 30, 2022, December 31, 2021 and December 25, 2020, respectively.

The Company’s treatment of interest and penalties related to the resolution of uncertain tax positions is to report them as a component of income tax expense. However, the Company’s current unrecognized tax benefits are presented net with their related deferred tax assets or will be used on their fiscal year 2022 income tax return filing, therefore, no interest and
penalties have been included in the Company’s income tax expense for years ended December 30, 2022, December 31, 2021 and December 25, 2020.

Balance - December 27, 2019$8,281 
Additions for tax position of the current year538 
Reduction for tax positions of prior years for:
Changes in judgment(670)
Lapses of applicable statutes of limitations(55)
Balance - December 25, 2020$8,094 
Additions for tax position of the current year400 
Reduction for tax positions of prior years for:
Changes in judgment(162)
Lapses of applicable statutes of limitations(76)
Balance - December 31, 2021$8,256 
Additions for tax position of the current year528 
Reduction for tax positions of prior years for:
Changes in judgment148 
Lapses of applicable statutes of limitations(85)
Balance - December 30, 2022$8,847 

The Company files income tax returns in the United States, including various state and local jurisdictions. The Company’s subsidiaries file income tax returns in the United Kingdom, Australia, China, Germany, India, New Zealand, Switzerland, Serbia, and Canada. The Company is subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company is no longer subject to income tax examinations for the following jurisdictions and years: federal, for years before 2019; state and local, for years before 2017; or foreign, for years before 2016. However, federal net operating loss and credit carryforwards from all years are subject to examination and adjustments for at least three years following the year in which the attributes are used.

Starting December 27, 2019, and forward, the Company’s position is that its overseas subsidiaries will not invest undistributed earnings indefinitely. Future unremitted earnings when distributed are expected to be either distributions of GILTI or Sub F — previously taxed income or eligible for 100% dividends received deduction. The withholding on any unremitted earnings and related state income taxes on such earnings are not considered material. Therefore, the Company has not provided deferred U.S. income taxes from non-U.S. subsidiaries.
The reconciliation of the Company’s effective income tax rate with the statutory rate is as follows:

December 30, 2022December 31, 2021December 25, 2020
Federal income tax rate21.00 %21.00 %21.00 %
State income taxes(2.33)%1.04 %1.57 %
Foreign income taxes(0.10)%(0.07)%1.03 %
Deferred rate change(3.78)%0.46 %(6.00)%
Foreign tax rate differences(1.71)%0.42 %(1.31)%
Autonomic sale (tax)— %— %29.82 %
Incentive stock compensation(12.73)%(2.23)%(3.08)%
Cash in lieu of Tax Receivable Agreement— %(5.06)%— %
Tax receivable agreement adjustments/amortization
(0.31)%— %— %
Research and development tax credits33.50 %2.84 %14.37 %
Valuation allowance(25.52)%1.42 %(41.61)%
Changes in uncertain tax positions(7.36)%(0.41)%0.64 %
Contingent value rights9.25 %(1.47)%(0.35)%
Foreign-derived intangible income9.35 %— %— %
Global intangible low-taxed income(2.51)%(0.66)%— %
Meals and entertainment(1.93)%(0.22)%(0.20)%
Other items, net (1)
(0.35)%(1.64)%(1.00)%
Effective income tax rate14.47 %15.42 %14.88 %
(1)Global intangible low-taxed income, contingent value rights, and meals and entertainment were grouped in other items, net for the prior two fiscal years as it was not material to require separate statement. The Company has updated the rate reconciliation for the prior years to separately state these items for consistency purposes.

Due to pretax losses in the years ended December 30, 2022, December 31, 2021 and December 25, 2020, the effective rate items listed above with negative signs represent increases to income tax expense and positive amounts represent decreases to income tax expense.

In March 2021, the U.S. Internal Revenue Service (“IRS”) began an examination of the Company’s 2018 U.S. federal income tax return. The examination concluded in 2022 with no change. In July 2021, the state of California began an examination of the Company’s 2018 California income tax return. The examination concluded in 2022 with no change. There are no open income tax audits as of December 30, 2022.