Income Taxes |
6 Months Ended |
|---|---|
Jun. 29, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company's effective tax rate was 16% and 15% for the three-month and six-month periods ended June 29, 2025, respectively, and 13% and 18% for the three-month and six-month periods ended June 30, 2024, respectively. The Company has defined its major tax jurisdictions as the United States, Ireland, China, Japan, and Korea, and within the United States, Massachusetts. The statutory tax rate is 12.5% in Ireland, 25% in China, 34.7% in Japan, and 21% in Korea, compared to the U.S. federal statutory corporate tax rate of 21%. These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month and six-month periods ended June 29, 2025 and June 30, 2024. The Company recorded a net discrete tax benefit totaling $211,000 and $518,000 for the three-month and six-month periods ended June 29, 2025, respectively, and a net discrete tax benefit totaling $463,000 and a net discrete tax expense totaling $2,622,000 for the three-month and six-month periods ended June 30, 2024, respectively. Discrete tax items for the six-month period ended June 29, 2025 included (1) an increase in tax expense of $2,668,000 related to stock-based compensation; (2) an increase in tax expense of $884,000 for interest expense related to tax reserves; (3) an increase in tax expense of $669,000 related to taxability of payroll tax credit refunds received during the year; (4) a decrease in tax expense of $2,393,000 for release of tax reserves related to statute of limitation lapse; (5) a net decrease in tax expense of $2,013,000 related to an adjustment to the Company's deferred tax position; and (6) a net decrease in tax expense of $333,000 related to return-to-provision adjustments. Discrete tax items for the six-month period ended June 30, 2024 included (1) an increase in tax expense of $1,371,000 related to stock-based compensation; (2) an increase in tax expense of $477,000 related to state tax matters; (3) an increase in tax expense of $922,000 for interest expense related to tax reserves; (4) a net decrease in tax expense of $1,278,000 related to return-to-provision adjustments; and (5) an increase in tax expense of $1,130,000 for other tax matters. The Company’s reserve for income taxes, including gross interest and penalties, was $28,109,000 as of June 29, 2025, of which $25,742,000 was classified as a non-current liability and $2,367,000 was classified as an offset to deferred tax assets. If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period. Within the United States, the tax years 2021 through 2024 remain open to examination by the Internal Revenue Service, and 2020 through 2024 remain open to examination by various state tax authorities. The tax years 2013 through 2024 remain open to examination by various international taxing authorities in other jurisdictions in which the Company operates. On July 4, 2025, tax legislation known as the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. OBBBA modifies certain international tax provisions such as the tax on Global Intangible Low Taxed Income ("GILTI") and renames GILTI as Net CFC Tested Income ("NCTI"). The Company records NCTI taxes on a deferred basis. The Company is in the early stages of evaluating the impact of U.S. tax law changes introduced by OBBBA on our consolidated financial statements and disclosures. As of the date of this filing, we expect OBBBA to materially increase our deferred tax liability and income tax expense in the third quarter of 2025, while also providing a cash tax benefit estimated between $12 million and $15 million for the full year. A full quantitative estimate of all specific financial impacts cannot be reasonably determined at this time due to the complexity of the changes in OBBBA and the need for further analysis.
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