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Income Taxes | 12 Months Ended
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Mar. 29, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 19. Income Taxes The components of income before provision for income taxes include the following:
|  | Fiscal Year Ended |
|  | March 29, 2024 |  |  | March 31, 2023 |  |  | March 25, 2022 |
Income before provision for income taxes attributable to: |  |  |  |  |  |  |  |  |
Domestic operations |  | $ | 183,524 |  |  | $ | 190,107 |  |  | $ | 121,883 |
Foreign operations |  |  | 11,273 |  |  |  | 21,239 |  |  |  | 18,863 |
Total |  | $ | 194,797 |  |  | $ | 211,346 |  |  | $ | 140,746 |
Significant components of the provision for income taxes are as follows:
|  | Fiscal Year Ended |
|  | March 29, 2024 |  |  | March 31, 2023 |  |  | March 25, 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 16,086 |  |  | $ | 53,973 |  |  | $ | 7,779 |
State |  |  | 1,319 |  |  |  | 472 |  |  |  | 1,553 |
Foreign |  |  | 43,117 |  |  |  | 9,523 |  |  |  | 4,361 |
Total current |  |  | 60,522 |  |  |  | 63,968 |  |  |  | 13,693 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 10,721 |  |  |  | (36,276 | ) |  |  | 7,892 |
State |  |  | (131 | ) |  |  | 310 |  |  |  | 371 |
Foreign |  |  | (29,203 | ) |  |  | (4,150 | ) |  |  | (765 | )
Total deferred |  |  | (18,613 | ) |  |  | (40,116 | ) |  |  | 7,498 |
Total income tax provision |  | $ | 41,909 |  |  | $ | 23,852 |  |  | $ | 21,191 |
The difference between the tax provision at the statutory federal tax rate and the provision for income taxes is as follows:
|  | Fiscal Year Ended |
|  | March 29, 2024 |  |  | March 31, 2023 |  |  | March 25, 2022 |
Tax provision at U.S. statutory rate |  | $ | 40,907 |  |  | $ | 44,383 |  |  | $ | 29,557 |
State income taxes, net of federal benefit |  |  | 1,106 |  |  |  | 1,027 |  |  |  | 2,370 |
Foreign derived intangible income |  |  | (25,612 | ) |  |  | (25,391 | ) |  |  | (9,066 | )
Research and development tax credit |  |  | (6,188 | ) |  |  | (3,641 | ) |  |  | (2,823 | )
Stock-based compensation |  |  | (956 | ) |  |  | (1,025 | ) |  |  | (230 | )
Cumulative provision-to-return |  |  | (1,147 | ) |  |  | (914 | ) |  |  | (590 | )
Gain on contingent purchase price reduction |  |  | — |  |  |  | (588 | ) |  |  | (420 | )
Subpart F income, net of credits |  |  | (168 | ) |  |  | (307 | ) |  |  | 283 |
Provision for uncertain tax positions |  |  | 827 |  |  |  | (81 | ) |  |  | (17 | )
162(m) limitation |  |  | 3,010 |  |  |  | 8,931 |  |  |  | 3,988 |
Foreign tax rate |  |  | 2,632 |  |  |  | 954 |  |  |  | (157 | )
Deferred tax remeasurement |  |  | — |  |  |  | 651 |  |  |  | — |
Transaction costs |  |  | 1,848 |  |  |  | 338 |  |  |  | 307 |
CARES carryback claim and amended returns |  |  | — |  |  |  | — |  |  |  | (2,031 | )
Entity restructuring |  |  | 25,921 |  |  |  | — |  |  |  | — |
Other |  |  | (271 | ) |  |  | (485 | ) |  |  | 20 |
Total income tax provision |  | $ | 41,909 |  |  | $ | 23,852 |  |  | $ | 21,191 |
Entity restructuring relates to post-acquisition integrations to align business operations and integrate Crocus’s assets and workforce into the Company’s existing affiliates. The Company engaged in an intra-entity asset sale which resulted in a taxable gain reduced by NOLs in France and the generation and utilization of foreign tax credits in the U.S. Assets were transferred at fair market value pursuant to a valuation. The entity restructuring increased the effective tax rate primarily because a deferred tax liability was established on the difference between the fair market value and book value of Crocus’s intellectual property transferred to the U.S. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
|  | March 29, 2024 |  |  | March 31, 2023 |
Deferred income tax assets: |  |  |  |  |  |
Capitalized research and development costs |  | $ | 62,651 |  |  | $ | 30,582 |
Bonuses, sales commissions and other compensation |  |  | 9,407 |  |  |  | 11,506 |
Inventory and sales related |  |  | 16,766 |  |  |  | 8,730 |
Stock-based compensation |  |  | 4,544 |  |  |  | 3,842 |
Tax credits |  |  | 3,290 |  |  |  | 3,220 |
Lease liability |  |  | 2,388 |  |  |  | 2,479 |
Property, plant and equipment, net |  |  | 157 |  |  |  | — |
Other accruals and reserves |  |  | 2,653 |  |  |  | 2,803 |
Net operating loss carryforward |  |  | 8,589 |  |  |  | 361 |
Gross deferred income tax assets |  |  | 110,445 |  |  |  | 63,523 |
Valuation allowance for deferred income tax assets |  |  | (3,160 | ) |  |  | (3,581 | )
Total deferred income tax assets |  |  | 107,285 |  |  |  | 59,942 |
Deferred income tax liabilities: |  |  |  |  |  |
Equity method and other investments |  |  | (1,782 | ) |  |  | (4,172 | )
Intangibles, net |  |  | (48,875 | ) |  |  | (1,090 | )
Property, plant and equipment, net |  |  | — |  |  |  | (1,930 | )
Right-of-use asset |  |  | (2,132 | ) |  |  | (2,391 | )
Total deferred income tax liabilities |  |  | (52,789 | ) |  |  | (9,583 | )
Net deferred income tax assets |  | $ | 54,496 |  |  | $ | 50,359 |
Pursuant to the 2017 Tax Cuts and Jobs Act, U.S. tax law requires us to capitalize and amortize domestic and foreign research and development expenditures over five and 15 years, respectively (“174 Capitalization”). The impact of 174 Capitalization to our deferred tax assets i s $62,651. As part of the recent Crocus acquisition, the Company acquired Net Operating Loss (“NOL”) and Research and Development (“R&D”) Credit carryforwards. The Internal Revenue Code of 1986, as amended (“IRC”), provides for a limitation of the annual use of NOLs, R&D Credits, and other tax attributes following certain ownership changes that limit the ability to utilize NOL and R&D Credit carryforwards. Under IRC Sections 382 and 383 an ownership change is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period. Crocus had multiple ownership changes and based on the existing Section 382 and 383 limitations its attributes are also subject to valuation allowances. Our initial estimate, which may be revised during the measurement period, of Crocus’s gross utilizable Federal NOLs, State NOLs, and R&D credit carryforward, is $36,697, $10,345, and $351, respectively. NOLs may be available to reduce future taxable income. As of March 29, 2024 the company had net Federal NOLs of $7,707 that were generated after December 31, 2017 and therefore carryforward indefinitely. As of March 29, 2024, the Company had various net state NOLs of $722 which may be available to reduce future taxable income through fiscal year 2043. Additionally, Allegro also has net state NOLs of $160 that have been fully offset by a valuation allowance. As of March 29, 2024, the Company had net state research and development tax credit (“R&D Credit”) carryforwards of $290 which may be available to reduce future taxable income indefinitely. Additionally, Allegro also has net R&D credit carryforwards of $3,000 that have been fully offset by a valuation allowance. The Company’s intent is to permanently reinvest and use its existing foreign cash to fund its subsidiaries’ working capital needs, short-term and long-term capital projects, and to make investments and acquisitions. It is impracticable for the Company to determine the amount of the unrecognized tax liability due to the notional assumptions required and the complexities associated with these hypothetical calculations. No deferred tax liability has been established with respect to unremitted earnings and outside basis difference in its foreign subsidiaries. The Company filed carryback claims allowable under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) to utilize NOLs and carryover credits generated during fiscal year 2021. As of March 29, 2024, the Company has an outstanding receivable of $11,091 r elated to these filings that are classified as a long-term tax receivable. Uncertain Tax Positions As of March 29, 2024, the Compa ny had $4,980 of gross unrecognized tax benefits, of which $4,968 would impact the effective tax rate, if recognized. As of March 31, 2023, the Company had $2,408 of gross unrecognized tax benefits, of which $2,392 would impact the effective tax rate, if recognized. As of March 25, 2022, the Company had $2,459 of gross unrecognized tax benefits, of which $2,433 would impact the effective tax rate, if recognized. These amounts are recorded as a long-term liability, as the Company does not anticipate payment within one year.
|  | Fiscal Year Ended |
|  | March 29, 2024 |  |  | March 31, 2023 |  |  | March 25, 2022 |
Beginning balance |  | $ | 2,408 |  |  | $ | 2,459 |  |  | $ | 2,554 |
Gross acquired - tax positions from prior periods |  |  | 2,210 |  |  |  | — |  |  |  | — |
Gross increases - tax positions in prior period |  |  | 378 |  |  |  | — |  |  |  | — |
Lapse in statute of limitations |  |  | (16 | ) |  |  | (51 | ) |  |  | (95 | )
Balance at end of period |  | $ | 4,980 |  |  | $ | 2,408 |  |  | $ | 2,459 |
The Company believes that all tax positions are adequately provided for; amounts asserted by tax authorities could be greater or less than the accrued position. Accordingly, the Company’s provisions for federal, state and foreign tax related matters to be recorded in the future might change as revised estimates are made, or the underlying matters are settled or otherwise resolved. The Company’s policy is to classify interest expense and penalties, if any, as components of the income tax provision in the consolidated statements of operations. The Company recorded net increase s of $826, $39 an d $58 in interest, penalties and releases during fiscal years 2024, 2023 and 2022, respectively. As of March 29, 2024 and March 31, 2023, the amount of accrued interest and penalties totaled approximatel y $906 and $445, respectively. Examinations by Tax Authorities The Company and its subsidiaries are routinely subject to examination by taxing authorities in the United States and the foreign jurisdictions in which it does business. Currently, the Internal Revenue Service is auditing the CARES Act carryback claim for fiscal year 2016 through 2021, and the Bureau of Internal Revenue is auditing our Philippine subsidiary for tax year 2019. U.S. and material foreign jurisdictions statutes of limitation remain open as of 2016.

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