Income Taxes

9 Months Ended

Dec. 24, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded the following tax (benefit) provision in its unaudited consolidated statements of operations:

	Three-Month Period Ended						Nine-Month Period Ended
	December 24, 2021			December 25, 2020			December 24, 2021			December 25, 2020
Operating taxes	$	6,517		$	(12,169)		$	17,785		$	(9,764)
Discrete tax items	(236)			(18,354)			(1,098)			(18,149)
Provision (benefit) for income taxes	$	6,281		$	(30,523)		$	16,687		$	(27,913)
Annual operating tax rate	16.6		%	34.2		%	16.1		%	52.8		%
Effective tax rate	16.0		%	85.8		%	15.1		%	150.9		%

The Company’s provision (benefit) for income taxes is comprised of the year-to-date taxes based on an estimate of the annual effective tax rate plus the tax impact of discrete items.

The Company is subject to tax in the U.S. and various foreign jurisdictions. The Company’s effective tax rate can fluctuate primarily based on: the mix of its U.S. and foreign income; the impact of discrete transactions; and the difference between the amount of tax benefit generated by the foreign derived intangible income deduction (“FDII”) and research credits offset by the additional tax from the global intangible low-tax income (“GILTI”).

The Company regularly assesses the likelihood of outcomes that could result from the examination of its tax returns by the IRS and other tax authorities to determine the adequacy of its income tax reserves and expense. Should actual events or results differ from the Company’s then-current expectations, charges or credits to the Company’s provision for income taxes may become necessary. Any such adjustments could have a significant effect on the results of operations.

Income tax expense and the effective income tax rate were $6,281, or 16.0%, and $16,687, or 15.1%, for the three- and nine-month periods ended December 24, 2021, respectively. Income tax benefit and the effective income tax rate were $30,523, or 85.8%, and $27,913, or 150.9%, for the three- and nine-month periods ended December 25, 2020, respectively. The increase in income tax expense was primarily attributable to tax impacts of the IPO transaction recorded in the prior three- and nine-month period. The IPO transaction resulted in excess tax over financial reporting deductions related to a $40,440 stock-based compensation charge (and the related incremental tax deductions), a $16,000 one-time dividend treated as compensation expense for tax purposes, as well as a tax loss on the divestiture of Polar Semiconductor, LLC (“PSL”). The tax impacts of these transactions and other discrete transactions caused an overall U.S. NOL that will be carried back five years. Additional fluctuations in our effective income tax rate relate primarily to differences in our U.S. taxable income, estimated FDII benefits, GILTI income, research credits, non-deductible stock-based compensation charges, and discrete tax items.