Income Taxes |
9 Months Ended |
|---|---|
Jun. 27, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES Our effective tax rates were 30.1% and 64.5% for the third quarter of fiscal 2026 and 2025, respectively, and 28.2% and 36.0% for the first nine months of fiscal 2026 and 2025, respectively. In all periods presented, the effective tax rates were higher than the federal statutory tax rate due to state taxes, partially offset by foreign valuation allowance releases. Additionally, the effective tax rates for the third quarter and first nine months of fiscal 2026 were increased by non-deductible officer compensation, and the effective tax rates for the third quarter and first nine months of fiscal 2025 were increased by the impact of a $343 million non-deductible goodwill impairment. Unrecognized tax benefits were $123 million and $168 million at June 27, 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 June 27, 2026, the assessment totaled approximately $537 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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