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INCOME TAXES
 6 Months Ended
Nov. 29, 2024
INCOME TAXES  
INCOME TAXES

6. INCOME TAXES

 

The following table provides details of income taxes:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 29,

 

 

November 30,

 

 

November 29,

 

 

November 30,

 

 (In thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Income (loss) before income tax expense (benefit)

 

$(1,245)

 

$6,109

 

 

$(431)

 

$10,799

 

Income tax expense (benefit)

 

 

(217)

 

 

20

 

 

 

(63)

 

 

36

 

Effective tax rate

 

 

17.4%

 

 

0.3%

 

 

14.6%

 

 

0.3%

 

The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to the research and development credits available to apply against federal and California income and the tax expense from stock-based compensation.

 

The determination of income taxes for the three and six months ended November 29, 2024 and November 30, 2023, respectively, was based on the Company’s estimated annual effective tax rate. For the three and six months ended November 29, 2024, the Company recognized a tax benefit due to quarter-to-date and year-to-date losses in the U.S.. Tax expense for the three and six months ended November 30, 2023 was primarily due to profitable foreign subsidiaries. Provision for income taxes for the three and six months ended November 30, 2023 did not included tax expense related to U.S. operations due to a valuation allowance. The Company maintained a full valuation allowance on all the U.S. net deferred tax assets through the first nine months of fiscal 2024. In the fourth quarter of fiscal 2024, the Company concluded that the valuation allowance related to the U.S. federal and state deferred tax assets was no longer required due to existence of sufficient positive evidence to support that it is more likely than not that its deferred tax assets are realizable. A significant income tax benefit of $21.9 million was recognized due to release of a valuation allowance in the fourth quarter of fiscal 2024.

 

The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.