To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma effective tax rate, pro forma net income (earnings) per share and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company, as described in more detail by category below.
The tables below provide reconciliations between the GAAP and non-GAAP measures.
Pro forma effective tax rate
The Company's income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, management believes disclosure of the effective tax rate and income tax provision before the effect of certain discrete tax items are important measures to permit investors' consistent comparison between periods.
(In thousands) |
| 13-Weeks Ended |
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| 14-Weeks Ended |
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| 52-Weeks Ended |
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| 53-Weeks Ended |
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| December 30, |
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| December 31, |
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| December 30, |
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| December 31, |
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| 2023 |
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| 2022 |
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| 2023 |
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| 2022 |
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| $ |
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| ETR(1) |
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GAAP income tax (benefit) provision |
| $ | (159,089) |
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| (41.5) % |
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| $ | 36,604 |
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| 11.1 % |
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| $ | (89,280) |
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| (7.4) % |
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| $ | 91,389 |
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| 8.6 % |
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Pro forma discrete tax items: |
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Tax effect of state rate change (2) |
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| — |
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| — |
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| (2,269) |
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| — |
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| Switzerland deferred tax assets (3) |
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| 181,410 |
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| (7,168) |
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| 181,410 |
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| (7,168) |
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| Poland incentive tax credits (4) |
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| 12,116 |
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| — |
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| 12,116 |
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| Pro forma income tax provision |
| $ | 34,437 |
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| 9.0 % |
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| $ | 29,436 |
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| 8.9 % |
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| $ | 101,977 |
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| 8.5 % |
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| $ | 84,221 |
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| 7.9 % |
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| (1) Effective tax rate is calculated by taking the income tax (benefit) provision divided by income before taxes, as presented on the face of the Condensed Consolidated Statements of Income. |
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| (2) In third quarter 2023, the Company recognized $2.3 million of tax expense due to the revaluation of deferred tax assets associated with the change in corporate income tax rate for the state of Kansas. |
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| (3) Certain Switzerland deferred tax assets related to the enactment of Switzerland Federal and Schaffhausen cantonal tax reform were revalued in the fourth quarters of 2023 and 2022, resulting in income tax benefit of $181.4 million and income tax expense of $7.2 million, respectively. |
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| (4) In fourth quarter 2023, the Company recognized $12.1 million of income tax benefit due to auto OEM manufacturing tax incentives in Poland. |
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