Income Taxes |
3 Months Ended |
|---|---|
Apr. 04, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The provision for income taxes is determined using an estimated annual effective tax rate. Our effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as expected R&D tax credits, non-deductible book compensation expenses, tax deductions for Foreign Derived Intangible Income, valuation allowances against deferred tax assets, recognition or derecognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where we conduct business. Also, excess tax benefits and tax detriments related to our equity compensation recognized in the unaudited condensed consolidated income statement could result in fluctuations in our effective tax rate period-over-period depending on the volatility of our stock price, number of restricted or performance stock units that vests, and stock options exercised during the period. We recognize deferred tax assets and liabilities, using enacted tax rates, for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating loss and tax credit carryovers. We record a valuation allowance against our deferred tax assets to reduce the net carrying value to an amount that we believe is more likely than not to be realized. When we establish or reduce our valuation allowances against our deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period when that determination is made. We recorded income tax expense of $1.8 million for the three months ended April 4, 2026 compared to income tax expense of $0.3 million for the three months ended March 29, 2025. The increase in income tax expense for the first quarter of 2026 compared to the first quarter of 2025 was primarily due to higher pre-tax income in the first quarter of 2026 compared to the first quarter of 2025. The increase in income tax expense was partially offset by higher income tax benefits recognized for net tax windfalls related to stock-based compensation in the first quarter of 2026 compared to the first quarter of 2025. Our total amount of unrecognized tax benefits was $5.3 million and $5.0 million as of April 4, 2026 and December 31, 2025, respectively. If recognized, $3.2 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of April 4, 2026 and December 31, 2025 were not significant. We file U.S. Federal and state income tax returns. We are subject to examination by the Internal Revenue Service (“IRS”) for tax years after 2021 and by state taxing authorities for tax years after 2020. While we are no longer subject to examination prior to those periods, carryforwards generated prior to those periods may still be adjusted upon examination by the IRS or state taxing authorities if they either have been or will be used in a subsequent period. We believe we have adequately accrued for tax deficiencies or reductions in tax benefits, if any, that could result from the examination and all open audit years. In July 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”). Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements. The enactment of the OBBBA did not have a material impact to our effective tax rate for the three months ended April 4, 2026. However, we expect the OBBBA to decrease our cash tax liability for 2026. We will continue to evaluate the full impact of the OBBBA corporate tax provision changes as additional guidance becomes available.
|