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Income Taxes
 12 Months Ended
Sep. 28, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s income (loss) before provision for income taxes for fiscal 2024, 2023 and 2022 were as follows:
September 28,
2024		September 30,
2023		October 1,
2022
(In thousands)
Domestic$(56,661)$(9,904)$54,609 
Foreign29,510 14,298 14,121 
Income (loss) before provision for income taxes
$(27,151)$4,394 $68,730 
Components of the provision for income taxes consisted of the following:
September 28,
2024		September 30,
2023		October 1,
2022
(In thousands)
Current:
U.S. Federal$8,094 $7,507 $— 
U.S. State4,023 4,947 483 
Foreign17,798 2,810 3,401 
Total current29,915 15,264 3,884 
Deferred:
U.S. Federal— — (1,459)
U.S. State— — (21)
Foreign(18,920)(596)(1,057)
Total deferred(18,920)(596)(2,537)
Provision for income taxes$10,995 $14,668 $1,347 
The Company is subject to income taxes in the United States and foreign jurisdictions in which it operates. The Company’s tax provision is impacted by the jurisdictional mix of earnings as its foreign subsidiaries have statutory tax rates different from those in the United States. Accordingly, the Company's effective tax rate will vary depending on jurisdictional mix of earnings and changes in tax laws. For the year ended September 28, 2024, the Company’s U.S. tax expense was adversely impacted by the requirement to capitalize and amortize research and development expenses under Section 174 of the U.S. Internal Revenue Code ("Section 174") as the Company recorded a current U.S. tax expense with no corresponding deferred tax benefit due to the valuation allowance maintained against its U.S. deferred tax assets. The Company recognized a benefit from income taxes from a favorable tax ruling on a Dutch Innovation Box application resulting in a lower Dutch corporate income tax rate applied to an intercompany sale of intellectual property and from the release of a non-U.S. valuation allowance.
Components of the Company’s deferred income tax assets and liabilities are as follows:
September 28,
2024		September 30,
2023
(In thousands)
Deferred tax assets
Capitalized research & development$107,474 $63,395 
Research & development tax credit carryforwards58,156 75,593 
Accrued expenses and reserves17,070 17,837 
Deferred revenue15,374 15,855 
Operating lease liability14,259 13,097 
Other capitalized costs12,030 5,364 
Stock-based compensation8,195 7,727 
Foreign net operating loss carryforwards5,783 7,606 
Depreciation2,991 2,700 
U.S. net operating loss carryforwards2,296 1,852 
Other592 494 
Total deferred tax assets244,220 211,520 
Valuation allowance(216,365)(185,840)
Deferred tax assets, net of valuation allowance27,855 25,680 
Deferred tax liabilities
Right-of-use asset(10,955)(11,392)
Intangibles(3,392)(22,475)
Capitalized inventory
(3,254)— 
Total deferred tax liabilities(17,601)(33,867)
Net deferred tax assets (liabilities)$10,254 $(8,187)
Reported as
Deferred tax assets$10,314 $1,659 
Deferred tax liabilities(60)(9,846)
Net deferred tax assets (liabilities)$10,254 $(8,187)
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. A valuation allowance is provided to reduce the Company's deferred tax assets to amounts that are more-likely-than-not to be realized. The Company has assessed, on a jurisdictional basis, the realization of its net deferred tax assets, including the ability to carry back net operating losses, the existence of taxable temporary differences, the availability of tax planning strategies and available sources of future taxable income. The Company has concluded that based on cumulative taxable income and future taxable income that it is able to realize a benefit for net deferred tax assets in all non-U.S. jurisdictions. In addition, the Company has concluded that a valuation allowance on its net deferred tax assets in the U.S. continues to be appropriate considering cumulative taxable losses in recent years and uncertainty with respect to future taxable income. It is possible that within the next 12 months there may be sufficient positive evidence to release a portion or all of the remaining valuation allowance in the U.S. Release of the remaining valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective earnings in the United States.
For the year ended September 28, 2024, the Company had gross state net operating loss carryforwards of $33.4 million, which expire beginning in 2032, as well as $39.9 million in foreign net operating loss carryforwards with an indefinite life. As of September 28, 2024, the Company also had U.S. federal research and development tax credit carryforwards as filed of $37.6 million, and state research and development tax credit carryforwards as filed of $48.0 million, which will expire beginning in 2041 and 2026, respectively. The federal and state research and development tax credits are shown net of uncertain tax positions and net of federal benefit, as applicable, in the components of the Company's deferred income tax assets and liabilities. For the year ended
September 28, 2024, the increase in capitalized research and development relates to the requirement to capitalize research and development expenses under Section 174.
Because of the change of ownership provisions of Sections 382 and 383 of the Internal Revenue Code, and similar state provisions, use of a portion of the Company’s U.S. federal and state net operating loss and research and development tax credit carryforwards may be limited in future periods if there are future changes in ownership. Further, a portion of the carryforwards may expire before being applied to reduce future taxable income and income tax liabilities if sufficient taxable income is not generated in future periods.
The following table summarizes changes in the valuation allowance for fiscal 2024, 2023 and 2022:
September 28,
2024		September 30,
2023		October 1,
2022
(In thousands)
Beginning balance$185,840 $162,267 $155,978 
Increase during the period32,573 23,628 13,841 
Decrease during the period(2,048)(55)(7,552)
Ending balance$216,365 $185,840 $162,267 
Reconciliation of U.S. statutory federal income taxes to the Company’s provision for income taxes is as follows:
September 28,
2024		September 30,
2023		October 1,
2022
(In thousands)
U.S. federal income taxes at statutory rate$(5,702)$923 $14,433 
U.S. state and local income taxes, net of federal benefit and state credits(2,496)(841)(2,594)
Foreign income tax rate differential1,544 734 970 
Stock-based compensation2,726 104 (15,532)
Federal research and development tax credits(8,240)(7,591)(8,983)
Unrecognized federal tax benefits1,082 184 (2,482)
Change in tax rate(188)— 5,013 
Global intangible low taxed income, net of foreign tax credits944 1,234 290 
Foreign -derived intangible income (FDII) deduction(1,519)(6,863)— 
Subpart F income733 1,374 — 
162(m) executive compensation limitation1,496 2,513 2,574 
Deferred adjustments504 — — 
Intercompany IP sale(10,412)— — 
Other(121)(695)1,079 
Change in valuation allowance30,644 23,592 6,579 
Provision for income taxes$10,995 $14,668 $1,347 
Change in gross unrecognized tax benefits, excluding interest and penalties, as a result of uncertain tax positions are as follows:
September 28,
2024		September 30,
2023		October 1,
2022
(In thousands)
Beginning balance$17,619 $17,021 $21,252 
Increase (decrease) - tax positions in prior periods
147 (566)(6,039)
Increase - tax positions in current periods1,144 1,164 1,808 
Ending balance$18,910 $17,619 $17,021 
The Company does not anticipate changes to its unrecognized benefits within the next 12 months that would result in a material change to the Company’s financial position. The unrecognized tax benefits as of September 28, 2024, would have no impact on the effective tax rate if recognized
The Company conducts business in a number of jurisdictions and, as such, is required to file income tax returns in multiple jurisdictions globally. U.S. federal income tax returns for the 2020 tax year and earlier are no longer subject to examination by the U.S. Internal Revenue Service (the "IRS"). All U.S. federal and state net operating losses as well as research and development tax credits generated to date, including 2020 and earlier, used in open tax years are subject to adjustment by the IRS and state tax authorities.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. There were no accrued interest or penalties as of September 28, 2024, and September 30, 2023.
As of September 28, 2024, the Company continues to assert that the unremitted earnings in our foreign subsidiaries are permanently reinvested and therefore no deferred taxes or withholding taxes have been provided. If, in the future, the Company decides to repatriate its $9.0 million of undistributed earnings from these subsidiaries in the form of dividends or otherwise, the Company could be subject to withholding taxes payable at that time. Outside basis differences in the Company's foreign subsidiaries including unremitted earnings and any related taxes are not material.