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Income Taxes | 12 Months Ended
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Sep. 27, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 8. INCOME TAXES Income before income taxes consists of the following components (in millions):
| Fiscal Years Ended
| September 27, 2024 |  | September 29, 2023 |  | September 30, 2022
United States | $ | 1.9 |  |  | $ | 484.9 |  |  | $ | 663.0 |
Foreign | 634.5 |  |  | 593.9 |  |  | 813.6 |
Income before income taxes | $ | 636.4 |  |  | $ | 1,078.8 |  |  | $ | 1,476.6 |
The provision for income taxes consists of the following components (in millions):
| Fiscal Years Ended
| September 27, 2024 |  | September 29, 2023 |  | September 30, 2022
Current tax expense: |  |  |  |  |
Federal | $ | 79.0 |  |  | $ | 164.4 |  |  | $ | 88.7 |
State | 0.2 |  |  | 0.1 |  |  | 0.1 |
Foreign | 60.8 |  |  | 74.4 |  |  | 51.5 |
| 140.0 |  |  | 238.9 |  |  | 140.3 |
Deferred tax expense (benefit): |  |  |  |  |
Federal | (120.5) |  |  | (102.4) |  |  | 43.9 |
State | (0.5) |  |  | (0.1) |  |  | 0.1 |
Foreign | 21.4 |  |  | (40.4) |  |  | 17.1 |
| (99.6) |  |  | (142.9) |  |  | 61.1 |
Provision for income taxes | $ | 40.4 |  |  | $ | 96.0 |  |  | $ | 201.4 |
The actual income tax expense is different than that which would have been computed by applying the federal statutory tax rate to income before income taxes. A reconciliation of income tax expense as computed at the United States federal statutory income tax rate to the provision for income tax expense is as follows (in millions):
| Fiscal Years Ended
| September 27, 2024 |  | September 29, 2023 |  | September 30, 2022
Tax expense at United States statutory rate | $ | 133.6 |  |  | $ | 226.5 |  |  | $ | 310.1 |
Foreign tax rate difference | (84.7) |  |  | (90.7) |  |  | (105.3) |
Effect of stock compensation | 11.3 |  |  | 16.0 |  |  | (13.1) |
Research and development credits | (28.7) |  |  | (29.7) |  |  | (26.1) |
Change in tax reserve | 11.1 |  |  | 8.1 |  |  | 7.4 |
Global Intangible Low-Taxed Income | 18.1 |  |  | 16.3 |  |  | 36.1 |
Foreign Derived Intangible Income | (49.3) |  |  | (65.9) |  |  | (39.9) |
Section 162(m) limitation | 10.6 |  |  | 10.9 |  |  | 21.0 |
Other, net | 18.4 |  |  | 4.5 |  |  | 11.2 |
Provision for income taxes | $ | 40.4 |  |  | $ | 96.0 |  |  | $ | 201.4 |
The Company operated in foreign jurisdictions with income tax rates lower than the United States tax rate of 21.0% for fiscal 2024, fiscal 2023, and fiscal 2022. The Company had accrued $46.1 million and $57.0 million of the deemed repatriation tax in short-term and long-term liabilities within the Consolidated Balance Sheets, respectively, as of September 27, 2024. The Company had accrued $34.9 million and $105.8 million of the deemed repatriation tax in short-term and long-term liabilities within the Consolidated Balance Sheets, respectively, as of September 29, 2023. The remaining repatriation tax is payable over the next two years. The Company operates under a tax holiday in Singapore, which is effective through September 30, 2025, with the ability to extend through September 30, 2030. The current tax holiday is conditioned upon the Company’s compliance with certain conditions, including employment and investment thresholds in Singapore. The impact of the tax holiday decreased Singapore taxes owed by $67.7 million, $66.0 million, and $96.6 million during fiscal 2024, fiscal 2023, and fiscal 2022, respectively, which resulted in tax benefits of $0.42, $0.41, and $0.59 of diluted earnings per share, respectively. These tax benefits were partially offset by an increase in tax expense on GILTI. Deferred income tax assets and liabilities consist of the tax effects of temporary differences related to the following (in millions):
| As of
| September 27, 2024 |  | September 29, 2023
Deferred tax assets: |  |  |
Inventory | $ | 44.5 |  |  | $ | 24.1 |
Accrued compensation and benefits | 16.5 |  |  | 14.4 |
Product returns, allowances, and warranty | 5.5 |  |  | 7.0 |
Share-based and other deferred compensation | 25.3 |  |  | 24.5 |
Net operating loss carry forwards | 6.4 |  |  | 12.2 |
Tax credits | 165.7 |  |  | 155.7 |
Operating leases | 46.1 |  |  | 45.6 |
R&D capitalization | 170.4 |  |  | 95.3 |
Intangible assets | 50.0 |  |  | 24.4 |
Other, net | 4.8 |  |  | 6.8 |
Deferred tax assets | 535.2 |  |  | 410.0 |
Less valuation allowance | (174.1) |  |  | (164.2) |
Net deferred tax assets | 361.1 |  |  | 245.8 |
Deferred tax liabilities: |  |  |
Property, plant, and equipment | (22.5) |  |  | (18.3) |
Operating leases | (47.0) |  |  | (44.3) |
Net deferred tax liabilities | (69.5) |  |  | (62.6) |
Total net deferred tax assets | $ | 291.6 |  |  | $ | 183.2 |
The deferred tax assets and liabilities based on tax jurisdictions are presented on our Consolidated Balance Sheets as follows (in millions):
| As of
| September 27, 2024 |  | September 29, 2023
Deferred tax assets | $ | 303.5 |  |  | $ | 192.3 |
Deferred tax liabilities | (11.9) |  |  | (9.1) |
Net deferred tax assets | $ | 291.6 |  |  | $ | 183.2 |
In accordance with GAAP, management has determined that it is more likely than not that a portion of the Company’s historic and current year income tax benefits will not be realized. As of September 27, 2024, the Company has a valuation allowance of $174.1 million. This valuation allowance is comprised of $155.4 million related to United States federal and state tax attributes and $18.7 million related to foreign deferred tax assets. The United States tax credits relate primarily to California research tax credits that can be carried forward indefinitely, for which the Company has provided a full valuation allowance. The Company does not anticipate sufficient taxable income or tax liability to utilize the United States and foreign credits. If these benefits are recognized in a future period, the valuation allowance on deferred tax assets will be reversed and up to a $174.1 million income tax benefit may be recognized. The Company will need to generate $1.2 billion of future United States federal taxable income to utilize its United States deferred tax assets, net of deferred tax liabilities and excluding state deferred tax assets with a full valuation allowance, as of September 27, 2024. The Company believes that future reversals of taxable temporary differences, and its forecast of continued earnings in its domestic and foreign jurisdictions, support its decision to not record a valuation allowance on other deferred tax assets. The Company will continue to assess its valuation allowance in future periods. The net valuation allowance increased by $9.9 million in fiscal 2024 primarily related to increases in state tax credit carryforwards. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions):
| Unrecognized Tax Benefits
Balance at September 29, 2023 | $ | 57.9 |
Increases based on positions related to prior years | 18.4 |
Decreases based on positions related to prior years | (7.7) |
Increases based on positions related to current year | 7.9 |
Decreases based on expirations of statute of limitations | (8.1) |
Decreases based on settlements with taxing authorities | (6.1) |
Balance at September 27, 2024 | $ | 62.3 |
Of the total unrecognized tax benefits at September 27, 2024, $47.3 million would impact the effective tax rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax rate, if recognized, due to the Company’s valuation allowance on certain tax attributes. The Company anticipates reversals within the next 12 months related to items such as the lapse of the statute of limitations, audit closures, and other items that occur in the normal course of business. Although the Company cannot predict the timing of resolution with taxing authorities, if any, the Company believes it is reasonably possible that its unrecognized tax benefits will be reduced by $5.7 million in the next 12 months due to expiration of the applicable statute of limitations. During fiscal 2024, fiscal 2023, and fiscal 2022, the Company recognized $5.5 million, $2.9 million, and $1.2 million, respectively, of interest or penalties related to unrecognized tax benefits. Accrued interest and penalties of $11.7 million and $6.2 million related to uncertain tax positions have been included in long-term tax liabilities within the Consolidated Balance Sheets as of September 27, 2024, and September 29, 2023, respectively. During fiscal 2023, the Company concluded an Internal Revenue Service examination of its federal income tax returns for the fiscal year ended September 28, 2018 (“fiscal 2018”) and the fiscal year ended September 27, 2019 (“fiscal 2019”). The Company agreed to various adjustments to fiscal 2018 and fiscal 2019 tax returns that resulted in the recognition of net tax expense of $1.6 million during fiscal 2023. The Company’s major tax jurisdictions as of September 27, 2024 are the United States, California, Canada, Mexico, Japan, and Singapore. For the United States, the Company has open tax years dating back to fiscal 2021. For California, the Company has open tax years dating back to fiscal 2004. For Canada, the Company has open tax years dating back to fiscal 2017. For Mexico, the Company has open tax years dating back to fiscal 2014. For Japan, the Company has open tax years dating back to fiscal 2017. For Singapore, the Company has open tax years dating back to fiscal 2017. The Company is subject to audit examinations by the respective taxing authorities on a periodic basis, of which the results could impact its financial position, results of operations, or cash flows. In August 2022, the U.S. government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income exceeding $1.0 billion. The Company is subject to the provisions of CAMT in fiscal 2024. CAMT had no impact to the Company’s consolidated financial statements for fiscal 2024.

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