Income Taxes |
6 Months Ended |
|---|---|
Mar. 28, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES Our effective tax rates were 26.2% and 51.0% for the second quarter of fiscal 2026 and 2025, respectively, and 27.1% and 25.1% for the first six months of fiscal 2026 and 2025, respectively. In all periods presented, the effective tax rates are higher than the federal statutory tax rate primarily due to state taxes and net unfavorable permanent book-to-tax differences, partially offset by various tax benefits. The effective tax rates for the second quarter and first six months of fiscal 2026 were increased by estimated foreign withholding tax on the repatriation of earnings of foreign subsidiaries. The effective tax rates for the second quarter and first six months of fiscal 2025 were increased by changes in unrecognized tax benefits. Additionally, the effective tax rate for the first six months of fiscal 2025 was decreased by the release of a $9 million valuation allowance on losses related to a production facility fire in the Netherlands and our subsequent decision to sell the facility. The release of the valuation allowance was due to tax legislation enacted in the Netherlands in the first quarter of fiscal 2025. Unrecognized tax benefits were $124 million and $168 million at March 28, 2026 and September 27, 2025, respectively. The decrease is primarily due to the settlement of state and local audits during the second quarter of fiscal 2026. We are currently under examination by the Internal Revenue Service ("IRS") for fiscal years 2021 and 2022. In the second quarter of fiscal 2026, the IRS issued notices of proposed adjustments related to our foreign-derived intangible income deduction, repairs expenses and research and development tax credits. The proposed adjustments could result in additional U.S. federal income tax payments of up to approximately $127 million, excluding interest and penalties, if the IRS ultimately prevails on all of its positions. However, we disagree with the IRS's positions, believe that our tax positions are well documented and properly supported, and intend to defend our positions through the administrative appeals process and litigation, if necessary. We do not expect the resolution of these matters will have a material impact on our consolidated results of operations, financial position or liquidity. In December 2021, we received an assessment from the Mexican tax authorities related to the 2015 sale of our direct and indirect equity interests in subsidiaries which collectively held our Mexico operation. At March 28, 2026, the assessment totaled approximately $531 million (9.4 billion Mexican pesos), which included tax, inflation adjustment, interest and penalties. Based on analysis of our assessment in accordance with guidance related to unrecognized tax benefits, we have not recorded a liability related to our assessment. Additionally, the purchaser in the transaction also received an assessment from the Mexican tax authorities related to the sale of the indirect equity interest, which was affirmed in January 2025 by a circuit court in Mexico, but remains subject to potential further judicial review under a petition filed by the purchaser. The transaction agreement contains certain mutual indemnification provisions, and both parties provided notice of indemnification claims to the other party. On November 14, 2025, we settled the indemnification provision and entered into an agreement in which the purchaser agreed to assume all tax liabilities in connection with our assessment, assume defense of such assessment and waive all potential indemnification claims against the Company. In fiscal 2025, we recorded a pretax liability of $40 million for the estimated probable loss related to this indemnification provision, which was paid to the purchaser during the first quarter of fiscal 2026 following the settlement
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