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Income Taxes
 12 Months Ended
Sep. 27, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s income before income taxes consisted of the following:
 Years Ended
September 27, 2025September 28, 2024September 30, 2023
Domestic$381.1 $609.4 $861.4 
Foreign300.1 255.7 (185.3)
$681.2 $865.1 $676.1 
The provision (benefit) for income taxes contained the following components:
 Years Ended
September 27, 2025September 28, 2024September 30, 2023
Federal:
Current$182.6 $91.6 $250.6 
Deferred(95.7)(50.9)(72.1)
86.9 40.7 178.5 
State:
Current34.8 14.2 45.9 
Deferred(19.4)(7.5)(9.4)
15.4 6.7 36.5 
Foreign:
Current39.7 41.9 32.7 
Deferred(26.5)(13.7)(27.6)
13.2 28.2 5.1 
$115.5 $75.6 $220.1 
The income tax provision differed from the tax provision computed at the U.S. federal statutory rate due to the following:
 Years Ended
September 27, 2025September 28, 2024September 30, 2023
Income tax provision at federal statutory rate21.0 %21.0 %21.0 %
Increase (decrease) in tax resulting from:
State income taxes, net of federal benefit2.2 2.5 4.1 
U.S. tax on foreign earnings0.8 0.5 (1.0)
Tax credits(1.8)(1.6)(1.1)
Unrecognized tax benefits1.5 3.9 3.5 
Compensation1.0 1.0 0.8 
Foreign rate differential(9.0)(6.8)(4.8)
Assets held-for-sale charge— — 1.5 
Change in valuation allowance(4.0)2.7 8.2 
Return to provision1.8 (1.2)(1.9)
Expiration of tax loss carryforwards3.7 — — 
Worthless stock deduction— (12.4)— 
Other(0.2)(0.9)2.3 
17.0 %8.7 %32.6 %
The Company’s effective tax rate for fiscal 2025 differed from the U.S. statutory tax rate primarily due to the geographic mix of income, which was impacted by impairment charges in high-tax jurisdictions recorded in the second quarter of fiscal 2025, and income earned by the Company’s international subsidiaries, which are generally taxed at rates lower than the U.S. statutory tax rate, the U.S. deduction for foreign derived intangible income, federal and state tax credits, and U.S. tax on foreign earnings.
The Company’s effective tax rate for fiscal 2024 was lower than the U.S. statutory tax rate primarily due to a one-time tax benefit of $107.2 million related to a worthless stock deduction on an investment in one of the Company’s international subsidiaries recorded in the first quarter of fiscal 2024, the U.S. deduction for foreign derived intangible income, and the geographic mix of income earned by the Company’s international subsidiaries, and federal and state tax credits.
The Company’s effective tax rate for fiscal 2023 was higher than the U.S. statutory tax rate primarily due to the tax effect of the SSI ultrasound imaging assets held-for-sale charge, income tax reserves, the global intangible low-taxed income inclusion, and state income taxes, partially offset by the impact of the U.S. deduction for foreign derived intangible income, and the geographic mix of income earned by our international subsidiaries.
The Company obtains tax incentives through the Free Trade Zone Regime offered in Costa Rica which allows 100 percent exemption from income tax in the first eight years of operations and 50 percent exemption in the following four years. This tax incentive resulted in income tax savings of $79.7 million, $79.8 million and $45.5 million, or $0.35, $0.34 or $0.18 per share to diluted net income in fiscal years 2025, 2024 and 2023, respectively. The tax incentive for 100 percent exemption from income tax expires in fiscal year 2029, with the 50 percent exemption to expire in fiscal year 2033. The Company’s historical practice has been to renew, extend, or obtain new tax incentive grants upon expiration of existing tax incentive grants. If the Company is not able to renew, extend, or obtain new tax incentive grants, the expiration of existing tax incentive grants could have a material impact on the Company’s financial results in future periods.
The Company’s significant deferred tax assets and liabilities were as follows:
September 27, 2025September 28, 2024
Deferred tax assets
Net operating loss and other tax carryforwards$129.2 $137.1 
Capitalized research and development134.2 96.8 
Non-deductible accruals37.9 41.0 
Non-deductible reserves43.3 37.8 
Stock-based compensation21.7 21.9 
Nonqualified deferred compensation plan17.3 15.9 
Lease liability27.5 26.2 
Other temporary differences31.6 21.0 
442.7 397.7 
Less: valuation allowance(121.7)(143.1)
$321.0 $254.6 
Deferred tax liabilities
Depreciation and amortization$(99.8)$(161.8)
Right of use asset(24.8)(23.4)
$(124.6)$(185.2)
$196.4 $69.4 
Under ASC 740, Accounting for Income Taxes (ASC 740), the Company can only recognize the future benefit of deferred tax assets to the extent that it is “more likely than not” that these assets will be realized. After considering all available positive and negative evidence, the Company establishes a valuation allowance against specifically identified deferred tax assets because it is more-likely-than-not that these assets will not be realized. In making this determination, the Company considers numerous factors including historical profitability, estimated future taxable income and the character of such income. The valuation allowance decreased by $21.4 million in fiscal 2025 compared to fiscal 2024 primarily due to the expiration of state capital loss carryforwards which were subject to a valuation allowance.
As of September 27, 2025, the Company had $81.0 million, $215.7 million, and $253.9 million in gross federal, state, and foreign net operating losses, respectively, $4.9 million and $2.4 million in federal and state credit carryforwards, respectively, and $10.2 million and $134.4 million in gross state and foreign capital loss carryforwards, respectively. These losses, credits, and capital loss carryforwards expire between 2026 and 2044, except for $161.6 million in losses, $4.7 million in credits, and $134.4 million in capital loss carryforwards that have unlimited carryforward periods. The state and foreign net operating losses include $147.9 million and $186.8 million, respectively, and the state capital loss carryforwards include $10.2 million, that the Company expects will expire unutilized.
The Company has determined that unremitted foreign earnings are not considered indefinitely reinvested to the extent foreign earnings can be distributed without a significant tax cost. As such, the Company records foreign withholding tax liabilities related to the future repatriation of such earnings. The Company continues to indefinitely reinvest all other outside basis differences to the extent reversal would incur a significant tax liability. It is not practicable for the Company to calculate the unrecognized deferred tax liability related to such incremental tax costs on those outside basis differences.
The Company’s gross unrecognized tax benefits decreased $6.8 million from fiscal 2024 to 2025 primarily due to reserve releases resulting from statute of limitations expirations and audit settlements, which were partially offset by intercompany transfer pricing for ordinary business operations and increases to prior year positions. The $16.7 million increase in gross unrecognized tax benefits from fiscal 2023 to 2024 was primarily due to intercompany transfer pricing for ordinary business operations and increases to prior year positions, which were partially offset by reserve releases resulting from statute of
limitations expirations and audit settlements. In the next twelve months it is reasonably possible that the Company will reduce its gross unrecognized tax benefits, excluding interest, by up to $9.8 million due to expiring statutes of limitations. The timing of the ultimate resolution of the Company’s examinations with relevant taxing authorities, which can include formal administrative and legal proceedings, and could have a significant impact on the reversal of unrecognized tax benefits, is difficult to predict. As a result, the Company is not able to provide a reasonably reliable estimate of the timing for reversals of unrecognized income tax benefits that are under examination.
The Company’s unrecognized income tax benefits activity for fiscal 2025, 2024 and 2023 was as follows:
202520242023
Balance at beginning of fiscal year$273.2 $256.5 $247.6 
Tax positions related to current year:
Additions6.7 7.8 6.8 
Tax positions related to prior years:
Additions related to change in estimate10.5 11.8 4.5 
Reductions(0.6)(2.1)— 
Lapses in statutes of limitations and settlements(25.3)(0.8)(2.4)
Acquired tax positions:
Additions related to reserves acquired from acquisitions1.9 — — 
Balance as of the end of the fiscal year$266.4 $273.2 $256.5 
As of fiscal 2025, 2024, and 2023 there were $193.1 million, $213.9 million, and $240.5 million of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. During fiscal years 2025, 2024, and 2023, the Company recognized $18.5 million, $20.3 million, and $15.8 million in gross interest. The Company had gross accrued interest of $68.9 million and $50.4 million as of September 27, 2025 and September 28, 2024, respectively, and accrued penalties were not significant.
The Company and its subsidiaries are subject to examination by U.S. federal, state, and foreign tax authorities. The Company is currently undergoing several income tax audits including examinations by the U.S. Internal Revenue Service (fiscal years 2017-2020), U.K. HM Revenue and Customs (fiscal years 2018-2022) and various state tax authorities. Excluding jurisdictions under audit, the Company’s income tax returns are generally no longer subject to examination prior to fiscal year 2021.
On July 4, 2025, H.R. 1 (also known as the “One Big Beautiful Bill”) was signed into law, introducing significant changes to U.S. federal tax law. Among other provisions, H.R. 1 provides for accelerated cost recovery of qualified property, immediate expensing of U.S.-based research and development costs, and changes to the U.S. international taxation regime. Provisions impacting the Company during fiscal year 2025 included the accelerated cost recovery of qualified property. Other provisions will take effect during fiscal years 2026 and 2027. H.R. 1 did not have a material effect on our consolidated financial statements or our results of operations for the fiscal year ending September 27, 2025.
Non-Income Tax Matters
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income tax items. A number of these examinations are ongoing in various jurisdictions. The Company takes certain non-income tax positions in the jurisdictions in which it operates and records loss contingencies pursuant to ASC 450, Contingencies (ASC 450). In the normal course of business, the Company’s positions and conclusions related to its non-income tax positions could be challenged, resulting in assessments by governmental authorities. While the Company believes estimated losses previously recorded are reasonable, certain audits are still ongoing and additional charges could be recorded in the future.