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Taxes
 12 Months Ended
Dec. 28, 2024
Income Tax Disclosure [Abstract]  
Taxes
13.
Taxes

Income Taxes

The components of the Company’s consolidated loss before income taxes consist of the following:

 

 

Fiscal Year Ended

 

 

 

December 28,

 

 

December 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Domestic

 

$

(358,108

)

 

$

(222,260

)

 

$

(376,710

)

Foreign

 

 

12,933

 

 

 

148,628

 

 

 

9,907

 

 

 

$

(345,175

)

 

$

(73,632

)

 

$

(366,803

)

 

 

The following table summarizes the Company’s consolidated provision for (benefit from) U.S. federal, state and foreign income taxes:

 

 

Fiscal Year Ended

 

 

 

December 28,

 

 

December 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

6,369

 

 

$

1,330

 

 

$

12,426

 

State

 

 

1,519

 

 

 

1,947

 

 

 

3,446

 

Foreign

 

 

19,216

 

 

 

15,525

 

 

 

20,022

 

 

 

$

27,104

 

 

$

18,802

 

 

$

35,894

 

Deferred:

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

(6,856

)

 

$

(12,419

)

 

$

(110,611

)

State

 

 

(8,420

)

 

 

4,263

 

 

 

(23,213

)

Foreign

 

 

(11,302

)

 

 

27,977

 

 

 

(12,005

)

 

 

$

(26,578

)

 

$

19,821

 

 

$

(145,829

)

Total provision for (benefit from) income taxes

 

$

526

 

 

$

38,623

 

 

$

(109,935

)

 

The effective tax rates for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022 were (0.2%), (52.5%) and 30.0%, respectively.

The Company’s effective tax rate for the fiscal year ended December 28, 2024 was impacted by the following items: (i) a $87,624 tax expense due to a valuation allowance and (ii) a $5,342 tax expense related to share-based awards. These expenses were partially offset by (i) a $15,689 tax benefit related to state tax and (ii) a $3,976 tax benefit related to foreign-derived intangible income (“FDII”).

The Company’s effective tax rate for the fiscal year ended December 30, 2023 was impacted by the following items: (i) a $53,626 tax expense due to a valuation allowance and (ii) a $12,172 tax expense related to income earned in foreign jurisdictions at rates higher than the U.S. These expenses were partially offset by (i) a $9,441 tax benefit related to state tax and (ii) a $2,637 tax benefit related to FDII.

The Company’s effective tax rate for the fiscal year ended December 31, 2022 was impacted by the following items: (i) a $45,748 tax benefit from a legal entity restructuring in connection with the Organizational Realignment (as defined below), which resulted in a reversal of certain deferred tax liabilities, and (ii) a $4,450 tax benefit related to FDII. These benefits were partially offset by (i) a $27,108 tax expense from a valuation allowance established to offset certain deferred tax assets due to the uncertainty of realizing future tax benefits from its interest expense carryforwards, (ii) a $2,245 tax expense related to income earned in foreign jurisdictions at rates higher than the U.S., and (iii) a $1,732 tax expense related to share-based awards.

 

 

 

Fiscal Year Ended

 

 

 

December 28,

 

 

December 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal statutory tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State income taxes (net of federal benefit)

 

 

4.6

%

 

 

12.8

%

 

 

3.8

%

Research and development credit

 

 

0.4

%

 

 

3.0

%

 

 

0.4

%

Tax windfall/shortfall on share-based awards

 

 

(1.5

%)

 

 

(0.9

%)

 

 

(0.5

%)

Tax rate changes

 

 

0.0

%

 

 

(0.1

%)

 

 

0.3

%

Executive compensation limitation

 

 

(0.4

%)

 

 

(1.4

%)

 

 

(0.2

%)

FDII

 

 

1.2

%

 

 

3.6

%

 

 

1.2

%

Change in valuation allowance

 

 

(25.4

%)

 

 

(72.8

%)

 

 

(7.1

%)

Impact of foreign operations

 

 

(0.3

%)

 

 

(16.5

%)

 

 

(1.6

%)

Reversal of certain deferred tax liabilities

 

 

0.0

%

 

 

0.0

%

 

 

12.5

%

Nondeductible costs

 

 

0.0

%

 

 

(1.3

%)

 

 

0.0

%

Other

 

 

0.2

%

 

 

0.1

%

 

 

0.2

%

Total effective tax rate

 

 

(0.2

%)

 

 

(52.5

%)

 

 

30.0

%

 

The deferred tax assets and liabilities recorded on the Company’s consolidated balance sheets are as follows:

 

 

December 28, 2024

 

 

December 30, 2023

 

Interest expense disallowance

 

$

101,563

 

 

$

76,350

 

Operating lease liabilities

 

 

13,672

 

 

 

16,174

 

Operating loss carryforwards

 

 

11,703

 

 

 

12,446

 

Provision for estimated expenses

 

 

2,916

 

 

 

3,657

 

Salaries and wages

 

 

8,904

 

 

 

13,489

 

Share-based compensation

 

 

9,553

 

 

 

14,920

 

Other comprehensive income

 

 

6,995

 

 

 

3,833

 

Capitalized research and development expenses

 

 

34,767

 

 

 

—

 

Other

 

 

12,045

 

 

 

4,287

 

Less: valuation allowance

 

 

(178,451

)

 

 

(89,801

)

Total deferred tax assets

 

$

23,667

 

 

$

55,355

 

Goodwill and intangible assets

 

$

(663

)

 

$

(47,323

)

Operating lease assets

 

 

(10,941

)

 

 

(13,285

)

Depreciation

 

 

(9,000

)

 

 

(12,749

)

Termination fee

 

 

—

 

 

 

(3,408

)

Prepaid expenses

 

 

(1,289

)

 

 

(900

)

Total deferred tax liabilities

 

$

(21,893

)

 

$

(77,665

)

Net deferred tax assets (liabilities)

 

$

1,774

 

 

$

(22,310

)

 

As of December 28, 2024 and December 30, 2023, the Company had primarily foreign and state net operating loss carryforwards of approximately $110,471 and $107,415, respectively, some of which have an unlimited carryforward period, while others expire in various years beginning in fiscal 2025. The Company maintains a full valuation allowance on its state and certain foreign net operating loss carryforwards as it is deemed more likely than not that such losses will not be realized. In fiscal 2022, the Company established a $27,108 valuation allowance on its business interest expense carryforwards. In fiscal 2023, the Company increased the valuation allowance on its business interest expense carryforwards by $20,268 and established a $30,331 valuation allowance on its remaining U.S. deferred tax assets. As of December 28, 2024, the Company recorded an additional $88,650 valuation allowance on its U.S. deferred tax assets.

The Company does not assert its $114,545 of undistributed foreign earnings as of December 28, 2024 are permanently reinvested. The Company has considered whether there would be any potential future costs of not asserting indefinite reinvestment and does not expect such costs to be significant.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

 

Fiscal Year Ended

 

 

 

December 28,

 

 

December 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at beginning of year

 

$

613

 

 

$

611

 

 

$

1,055

 

Increases related to tax positions taken in current year

 

 

—

 

 

 

—

 

 

 

145

 

Increases related to tax positions taken in prior years

 

 

—

 

 

 

9

 

 

 

8

 

Reductions related to tax positions taken in prior years

 

 

—

 

 

 

(9

)

 

 

(95

)

Reductions related to settlements with tax authorities

 

 

—

 

 

 

—

 

 

 

(273

)

Reductions related to lapse of statutes of limitations

 

 

(99

)

 

 

—

 

 

 

(206

)

Effects of foreign currency translation

 

 

(6

)

 

 

2

 

 

 

(23

)

Balance at end of year

 

$

508

 

 

$

613

 

 

$

611

 

 

At December 28, 2024, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $424.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. At December 28, 2024, with few exceptions, the Company was no longer subject to U.S. federal, state or local income tax examinations by tax authorities for fiscal years prior to fiscal 2020, or non-U.S. income tax examinations by tax authorities for fiscal years prior to fiscal 2017.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company had $33 and $83 of accrued interest and penalties at December 28, 2024 and December 30, 2023, respectively. The Company recognized $(50), $0 and $(60) of income tax expense in interest and penalties during the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. It is reasonably possible that within the next twelve months the Company’s unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce unrecognized tax benefits by $120.

Non-Income Tax Matters

The Internal Revenue Service (the “IRS”) notified the Company of certain penalties assessed related to the annual disclosure and reporting requirements of the Affordable Care Act. The Company appealed this determination, and in the third quarter of fiscal 2024, the penalties were fully abated and the federal tax lien maintained by the IRS during the appeals process was lifted.