Income taxes

9 Months Ended

Mar. 30, 2024

Income taxes

Income taxes

8. Income taxes

The below discussion of the effective tax rate for the periods presented in the consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate.

The Company’s effective tax rate on its income before taxes was 12.9% in the third quarter of fiscal 2024. During the third quarter of fiscal 2024, the Company’s effective tax rate was favorably impacted primarily by (i) decreases to unrecognized tax benefit reserves net of settlements and (ii) the mix of income in lower tax foreign jurisdictions.

During the third quarter of fiscal 2023, the Company’s effective tax rate on its income before taxes was 23.1%. During the third quarter of fiscal 2023, the Company’s effective tax rate was unfavorably impacted primarily by (i) the impact of U.S state taxes and (ii) the mix of income in higher tax jurisdictions, partially offset by (iii) decreases to unrecognized tax benefit reserves net of settlements.

For the first nine months of fiscal 2024, the Company’s effective tax rate on its income before taxes was 21.6%. The effective tax rate for the first nine months of fiscal 2024 was unfavorably impacted primarily by (i) the impact of U.S. state taxes, partially offset by (ii) decreases to valuation allowances.

During the first nine months of fiscal 2023, the Company’s effective tax rate on its income before taxes was 22.3%. The effective tax rate for the first nine months of fiscal 2023 was unfavorably impacted primarily by (i) the mix of income in higher tax jurisdictions and (ii) the impact of U.S. state taxes, partially offset by (iii) decreases to unrecognized tax benefit reserves net of settlements.

The Organization for Economic Co-operation and Development (OECD) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two. It is uncertain whether the U.S. will enact legislation to adopt Pillar Two. Pillar Two rules have been enacted in certain countries where the Company has operations and those will be effective in fiscal year 2025. The Company is currently evaluating the application, implementation, and tax impact of the Pillar Two rules for reporting and compliance purposes.