Note 5 - Income Taxes |
6 Months Ended |
|---|---|
Jul. 04, 2026 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
Note 5 – Income Taxes
For the fiscal quarter ended July 4, 2026, the Company reported tax benefits, and its effective tax rate was 8% compared to the fiscal quarter ended June 28, 2025, where the Company reported tax expenses, and its effective tax rate was 66%. The year-over-year change in the effective tax rate was primarily driven by the valuation allowance on certain deferred tax assets and the impact of foreign currency exchange rate fluctuations on the tax provisions of our non-U.S. entities.
For the six months ended July 4, 2026, the Company reported tax benefits, and its effective tax rate of , compared to the six months ended June 28, 2025, where the Company reported income taxes at an effective tax rate of ()%. The change in effective tax rate in the six months ended July 4, 2026, compared to the corresponding period in the prior fiscal year is mainly due to fiscal year 2025 second quarter profits that increased the Company’s tax expenses, in addition to the effect of foreign currency exchange rates on tax provisions in our non-US entities, and the valuation allowance on part of our deferred tax assets.
The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties. |