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Income Taxes | 9 Months Ended
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Dec. 28, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Our provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items, and any applicable income tax credits. The following table presents the provision for income taxes (in thousands) and the effective tax rates:
| Three Months Ended |  | Nine Months Ended
| December 28, |  | December 30, |  | December 28, |  | December 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Income before income taxes | $ | 153,701 |  |  | $ | 172,100 |  |  | $ | 350,309 |  |  | $ | 304,278 |
Provision for income taxes | $ | 37,696 |  |  | $ | 33,377 |  |  | $ | 90,069 |  |  | $ | 74,548 |
Effective tax rate | 24.5 | % |  | 19.4 | % |  | 25.7 | % |  | 24.5 | %
Our income tax expense was $37.7 million and $33.4 million for the third quarters of fiscal years 2025 and 2024, respectively, resulting in effective tax rates of 24.5 percent and 19.4 percent, respectively. Our income tax expense was $90.1 million and $74.5 million for the first nine months of fiscal years 2025 and 2024, respectively, resulting in effective tax rates of 25.7 percent and 24.5 percent, respectively. Effective tax rates for all periods presented were unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires research and development ("R&D") expenditures incurred in tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted, resulting in higher global intangible low-taxed income ("GILTI"), which is treated as a period cost. In addition, our effective tax rates for all periods presented were unfavorably impacted by U.S. tax rules related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, that reduce the amount of foreign tax credits available to offset GILTI. Our effective tax rates for the third quarter of fiscal year 2025 and the first nine months of fiscal years 2025 and 2024, respectively, were higher than the federal statutory rate primarily due to these two items, partially offset by the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate. Our effective rate for the third quarter of fiscal year 2024 was lower than the federal statutory rate due to a one-time tax benefit recorded during that period for a change in capitalized R&D expenditures that decreased GILTI inclusions in our fiscal year 2023 U.S. tax return. The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns. At December 28, 2024, the Company had unrecognized tax benefits of $32.1 million, all of which would impact the effective tax rate if recognized. The Company’s total unrecognized tax benefits are classified as “Non-current income taxes" in the Consolidated Condensed Balance Sheets. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 28, 2024, the balance of accrued interest and penalties, net of tax, was $11.3 million. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. et al. v. Commissioner which concluded that the regulations relating to the treatment of stock-based compensation expense in intercompany cost-sharing arrangements were invalid. In 2016 the U.S. Internal Revenue Service appealed the decision to the U.S. Court of Appeals for the Ninth Circuit (the “Ninth Circuit”). On June 7, 2019, the Ninth Circuit reversed the decision of the U.S. Tax Court and upheld the cost-sharing regulations. On February 10, 2020, Altera Corp. filed a Petition for a Writ of Certiorari with the Supreme Court of the United States, which was denied by the Supreme Court on June 22, 2020. Although the issue is now resolved in the Ninth Circuit, the Ninth Circuit's opinion is not binding in other circuits. The potential impact of this issue on the Company, which is not located within the jurisdiction of the Ninth Circuit, is unclear at this time. We will continue to monitor developments related to this issue and the potential impact of those developments on the Company's current and prior fiscal years. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Fiscal years 2017 through 2019 and 2021 through 2024 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company's fiscal year 2017, 2018, and 2019 federal income tax returns are under examination by the U.S. Internal Revenue Service ("IRS"). The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies. The final Revenue Agent’s Report asserted additional tax of approximately $168.3 million, excluding interest, and imposed penalties of approximately $63.7 million. The Company does not agree with the IRS's positions and has not accrued an additional liability. In July 2024, the Company entered the administrative dispute process with the IRS Independent Office of Appeals ("IRS Appeals"). We intend to vigorously dispute the proposed adjustments and pursue judicial remedies if an acceptable outcome cannot be reached with IRS Appeals. The Company expects it could take a number of years to reach resolution on these matters. Although the final resolution of these matters is uncertain, the Company believes adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes that may ultimately result. However, if the IRS prevails in these matters, the ultimate amount of assessed tax, interest, and penalties, if any, could be material and may have an adverse impact on our financial position, results of operations, and cash flows in future periods. The Company is not under an income tax audit in any other major taxing jurisdiction.

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