Income Taxes |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 28, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 14. Income Taxes Effective Tax Rate The Company utilized the discrete effective rate method for the three months ended March 28, 2026. The discrete method is applied when the application of the estimated AETR is impractical because it is not possible to reliably estimate the AETR. The Company believes that the use of the estimated annual effective tax rate method is not reliable because small changes in projected ordinary annual income could result in significant variability in the estimated AETR. The discrete method treats the year-to-date period as if it was the annual period and calculates the income tax expense or benefit on a discrete basis, rather than forecasting the full year AETR and applying it against current period book earnings, which the Company believes represents the best estimate of its AETR in the current period.
The effective tax rate for the quarter ended March 28, 2026 differed from the federal statutory rate of 21% primarily due to changes in valuation allowances and different statutory tax rates in foreign jurisdictions. The effective tax rate for the quarter ended March 29, 2025 differed from the federal statutory rate of 21% primarily due to changes in the valuation allowance on disallowed interest deductions, different statutory tax rates in foreign jurisdictions, U.S. tax credits and nondeductible executive compensation. Deferred Taxes As of March 28, 2026 and December 31, 2025, the Company’s net DTA included $20 million and $16 million, respectively, of disallowed U.S. interest deductions that the Company does not believe will be realized. The increase in this asset was a result of a $4 million net tax benefit recognized in the current year. In strict compliance with the American Institute of Certified Public Accountants’ Technical Questions and Answers 3300.01-02, which asserts that certain material evidence regarding the realizability of disallowed U.S. interest deductions should be ignored when assessing the need for a valuation allowance, the Company has not recognized a valuation allowance on this portion of the net DTA generated from disallowed interest.
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