Income Taxes |
6 Months Ended |
|---|---|
Jun. 29, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company's effective tax rate was 19% and 18% for the three-month and six-month periods ended July 5, 2026, respectively and 16% and 15% for the three-month and six-month periods ended June 29, 2025, respectively. For the three-month period ended July 5, 2026, the Company recorded a net discrete tax expense of $450,000 primarily driven by return-to-provision adjustments and uncertain tax reserves. For the six-month period ended July 5, 2026, the Company recorded a net discrete tax benefit of $729,000 primarily driven by excess tax benefits related to stock-based compensation. For the three-month period ended June 29, 2025, the Company recorded a net discrete tax benefit of $211,000, primarily driven by adjustments to uncertain tax reserves partially offset by excess tax liabilities related to stock-based compensation. For the six-month period ended June 29, 2025, the Company recorded a net discrete benefit of $518,000 primarily driven by adjustments to deferred tax balances and uncertain tax reserves partially offset by excess tax liabilities related to stock-based compensation. Excluding the impact of discrete tax items, the Company's effective tax rate was 18% for the three-month and six-month periods in 2026 and 16% for the same periods in 2025. The increase was primarily due to a greater portion of Company's pre-tax income being earned in higher tax rate jurisdictions. The Company has defined its major tax jurisdictions as the United States, Ireland, China, Japan, and Korea, and within the United States, Massachusetts. The statutory tax rate is 12.5% in Ireland, 25% in China, 34.8% in Japan, and 22% in Korea, compared to the U.S. federal statutory corporate tax rate of 21%. These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month and six-month periods ended July 5, 2026 and June 29, 2025. The Company’s reserve for income taxes, including gross interest and penalties, was $24,935,000 as of July 5, 2026, of which $21,963,000 was classified as a non-current liability and $2,972,000 was classified as an offset to deferred tax assets. If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period. Within the United States, the tax years 2022 through 2025 remain open to examination by the Internal Revenue Service, and 2021 through 2025 remain open to examination by various state tax authorities. The tax years 2017 through 2025 remain open to examination by various international taxing authorities in other jurisdictions in which the Company operates. The Organization for Economic Cooperation and Development ("OECD") provided model rules for a 15% global minimum tax, known as Pillar Two. Pillar Two has now been enacted by most key non-United States jurisdictions where the Company operates. From 2024 to 2025, the Company met at least one of the tests under the transitional safe harbor exception for all jurisdictions except for the United States. During 2024 and 2025, the Company had favorable treatment under a safe harbor that exempted U.S. multinational entity exposure to top-up tax under Pillar Two, which expired at the end of 2025. In 2026, OECD released the framework for a side-by-side system, providing a permanent solution for multinational entities headquartered in jurisdictions that had not fully adopted the Pillar Two Model Rules into domestic law but have current domestic tax regimes meeting certain requirements, including high statutory tax rates (at least 20%). However, given that uncertainty remains related to the implementation of this arrangement across the various jurisdictions in which the Company operates, the Company anticipates exposure to top-up tax effective January 1, 2026. This minimum tax is treated as a period cost but did not have a material impact on the Company's financial results of operations for the six-month period ended July 5, 2026. The Company continues to monitor legislative developments.
|