Income Taxes

3 Months Ended

Apr. 05, 2026

Income Taxes [Abstract]

Income Taxes

Note 5.  Income Taxes

Provision (benefit) for taxes was $9.9 million and $(32.1) million during the three-month periods ended April 5, 2026 and March 30, 2025. The benefit from taxes for the three-month period ended March 30, 2025 relates to pre-tax losses, primarily as a result of the provision for litigation accrual and credit losses recorded in the first quarter of 2025. The effective tax rate was 21.5% for the three-month period ended April 5, 2026, as compared with 18.2% for the three-month period ended March 30, 2025. The lower rate in the previous year was primarily due to the provision for the litigation accrual and credit losses and the mixture of earnings.

As of April 5, 2026, the Company had approximately $5.8 million of total unrecognized income tax benefits. Included in this amount were a total of $4.4 million of unrecognized income tax benefits that, if recognized, would affect the Company’s effective tax rate. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The Company’s accounting policy is to recognize interest and penalties accrued, relating to unrecognized income tax or benefit as part of its provision for income taxes. The Company had a net addition of approximately $0.4 million during the three-month period ended April 5, 2026 and had an accrued balance of $0.7 million of interest and penalties as of April 5, 2026.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S. In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to U.S. federal, state, local, and international income tax examinations by tax authorities for years prior to 2017.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S. It contains a broad range of tax reform provisions affecting businesses. The Company evaluated the full effects of the legislation on our annual effective tax rate and cash tax position, and it did not have a material impact on our Consolidated Financial Statements.

In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released the Pillar Two Model Rules which aim to reform international corporate taxation rules, including the implementation of a global minimum tax rate. The Company began implementation of the Pillar Two Model Rules in the first quarter of 2024. The Company continues to assess the effect of the Pillar Two Model Rules in all jurisdictions and does not expect that Pillar Two will have a material impact on its Consolidated Financial Statements.