
The Company’s effective tax rates from continuing operations for the three months ended June 26, 2026 and June 27, 2025 were 43.4% and 21.9%, respectively. Significant items contributing to differences between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the three-month period ended June 26, 2026 included $35.8 million of non-deductible expenses associated with the PA Consulting Transaction on March 20, 2026, $9.9 million of U.S. state income taxes and $6.3 million of U.S. tax on foreign earnings. These items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate of 21.9% for the three-month period ended June 27, 2025 were related to U.S. state income tax expense and U.S. tax on foreign earnings, partly offset by additional research and development credits claimed on the U.S. federal tax return.

The Company’s effective tax rates from continuing operations for the nine months ended June 26, 2026 and June 27, 2025 were 41.9% and 45.6%, respectively. Significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the nine-month period ended June 26, 2026 included unfavorable tax impacts of $47.0 million of non-deductible expenses associated with the PA Consulting Transaction on March 20, 2026, $12.7 million of U.S. state income taxes and $9.0 million of U.S. tax on foreign earnings. These items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

The most significant item contributing to the difference between the statutory U.S. federal corporate tax rate of 21% and the Company's effective tax rate of 45.6% for the nine-month period ended June 27, 2025 were related to $63.1 million in unfavorable tax impacts associated with the non-deductibility of losses from the Company's investment in Amentum stock, as well as U.S. state income tax expense and U.S. tax on foreign earnings, partly offset by additional research and development credits claimed on the U.S. federal tax return.

On July 4, 2025, H.R. 1, also referred to as the “One Big Beautiful Bill Act” (“OBBBA”), was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (“TCJA”), modifications to the international tax framework and pre-TCJA treatment for certain business provisions. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on the consolidated financial statements for the provisions that will be effective in future periods.



The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.