Income Tax

6 Months Ended

Apr. 01, 2023

Income Tax

Income Tax

Note 9. Income Tax

The Company estimates its annual effective income tax rate at the end of each quarterly period. The estimate takes into account the geographic mix of expected pre-tax income (loss), expected total annual pre-tax income (loss), enacted changes in tax laws, implementation of tax planning strategies and possible outcomes of audits and other uncertain tax positions. To the extent there are fluctuations in any of these variables during a period, the provision for income taxes may vary.

The Company’s provision for income taxes for the three months ended April 1, 2023 and April 2, 2022 was $26 million (23% of income before taxes) and $22 million (31% of income before taxes), respectively. The tax rate was lower for the three months ended April 1, 2023 due to $5 million of favorable discrete items related to excess tax benefit from stock compensation and adjustments to tax reserves.

The provision for income taxes for the six months ended April 1, 2023 and April 2, 2022 was $47 million (21% of income before taxes) and $41 million (28% of income before taxes), respectively. The tax rate was lower for the six months ended April 1, 2023 due to various discrete items, including the recognition of an $8 million tax benefit that resulted from the release of certain foreign tax reserves due to lapse of time and expiration of statutes of limitations.