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Income Taxes | 3 Months Ended
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Aug. 24, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For the three months ended August 24, 2024 and August 26, 2023, the Company’s income tax expense was $1.1 million, an effective tax rate of (22.7%), and $2.1 million, an effective tax rate of 40.0%, respectively. The income tax expense in the first quarter of fiscal 2025 measured against a pretax loss resulted in the negative effective tax rate. Despite the consolidated pretax loss in the first quarter of fiscal 2025, the Company recorded an income tax expense related to foreign income tax expense on international profits, along with rate impacting non-deductible items including tax adjustments associated with goodwill impairment, changes in valuation allowance and stock-based compensation. The Company operates in an international environment. Accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings (losses) in various locations and the applicable tax rates in those jurisdictions. Fluctuations in the consolidated effective tax rate year over year are due to the changes in the mix of operating income and losses amongst the various jurisdictions in which the Company operates. For the three months ended August 24, 2024 and August 26, 2023, the Company recognized a tax benefit of approximately $0.5 million and $0.2 million, respectively, associated with the exercise of nonqualified stock options, vesting of RSAs, RSUs, and disqualifying dispositions by employees of shares acquired under the ESPP. The Company’s total liability for unrecognized gross tax benefits, including accrued interest and penalties, was $1.1 million and $1.0 million as of August 24, 2024 and May 25, 2024, which, if ultimately recognized, would impact the effective tax rate in future periods. Management believes that there is a possibility that unrecognized gross tax benefits of $1.1 million are expected to be recognized within the next 12 months due to the expiration of a statute of limitation. The unrecognized tax benefits are included in other long-term liabilities in the Consolidated Balance Sheets. None of the unrecognized tax benefits are considered short-term liabilities as the Company does not anticipate any cash payments to settle the liability within the next 12 months.

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