v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income (loss) before income taxes consisted of the following for the years ended June 30:
(in thousands)202620252024
Income (loss) before income taxes:
United States$210,443 $(10,085)$(13,544)
International250,886 142,089 157,994 
Total income before income taxes$461,329 $132,004 $144,450 
Current income tax expense (benefit):
Federal$8,015 $2,048 $(4,003)
State3,480 346 1,045 
International54,734 43,986 41,784 
Total current income tax expense66,229 46,380 38,826 
Deferred income tax expense (benefit):
Federal$33,393 $(7,647)$(3,389)
State5,268 (1,549)(2,880)
International6,025 (3,888)(1,748)
Total deferred income tax expense (benefit):44,686 (13,084)(8,017)
Provision for income taxes$110,915 $33,296 $30,809 
Effective tax rate24.0 %25.2 %21.3 %
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes in accordance with the guidance in ASU 2023-09 is as follows for the year ended June 30, 2026:
2026
(in thousands, except percents)AmountPercent
Income taxes at U.S. statutory rate$96,879 21.0 %
State income taxes, net of federal tax benefit6,911 1.5 
Foreign tax effects
China
Statutory tax rate difference1,680 0.4 
Withholding tax3,581 0.8 
Audit settlement1,164 0.3 
Other394 0.1 
Switzerland
Statutory tax rate difference(9,907)(2.1)
Cantonal and municipal taxes5,651 1.2 
Other(549)(0.1)
Other foreign jurisdictions3,940 0.9 
Effect of cross-border tax laws1,450 0.3 
Tax credits
Research & development credit(3,271)(0.7)
Advanced manufacturing production credit(1,614)(0.3)
Nontaxable or nondeductible items2,382 0.5 
Changes in unrecognized tax benefits2,224 0.5 
Total provision for income taxes and effective tax rate$110,915 24.0 %
State income taxes in Pennsylvania, Indiana, California, Minnesota, New York, Illinois and Connecticut comprise the majority of the domestic state income taxes, net of federal tax benefit for the year ended June 30, 2026.
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes prior to the adoption of ASU 2023-09 was as follows for the years ended June 30, 2025 and 2024:
(in thousands)20252024
Income taxes at U.S. statutory rate$27,721 $30,335 
State income taxes, net of federal tax benefit(950)(1,412)
U.S. income taxes provided on international income3,220 4,272 
Combined tax effects of international income8,165 10,355 
Change in valuation allowance and other uncertain tax positions(103)(3,590)
U.S. research and development credit(2,880)(4,026)
Advanced manufacturing production credit(2,941)(488)
Combined effects of Swiss tax reform— (7,801)
Non-deductible executive compensation417 2,389 
Other647 775 
Provision for income taxes$33,296 $30,809 
During 2024, we recorded a tax benefit of $7.8 million to record the effects of a tax rate increase enacted by the cantonal and municipal tax authorities where we operate in Switzerland. The impact of this item is included in the tax reconciliation table under the caption "Combined effects of Swiss tax reform."
During 2024, we recorded a tax benefit of $6.2 million to reduce an accrual for an unrecognized tax benefit due to the lapse of the statute of limitation. The impact of this item is included in the tax reconciliation table under the caption "Change in valuation allowance and other uncertain tax positions."
During 2024, we recorded a tax charge of $2.9 million to settle income tax litigation in Italy. The impact of this item is included in the tax reconciliation table under the caption "Change in valuation allowance and other uncertain tax positions."
The components of net deferred tax assets and liabilities were as follows at June 30:
(in thousands)20262025
Deferred tax assets:
Net operating loss (NOL) carryforwards$16,028 $19,756 
Inventory valuation and reserves7,454 8,974 
Accrued employee benefits16,229 13,613 
Operating lease liabilities11,556 10,759 
Other accrued liabilities14,183 12,976 
Capitalized research and development costs20,378 42,947 
Tax credits and other carryforwards976 19,582 
Intangible assets5,557 11,618 
Total92,361 140,225 
Valuation allowance4,946 6,214 
Total deferred tax assets$87,415 $134,011 
Deferred tax liabilities:
Tax depreciation in excess of book$46,068 $53,337 
Operating lease right-of-use assets11,467 10,710 
Unremitted earnings not permanently reinvested6,795 3,754 
Pension benefits9,362 3,882 
Other3,459 4,464 
Total deferred tax liabilities$77,151 $76,147 
Total net deferred tax assets$10,264 $57,864 
Included in deferred tax assets at June 30, 2026 is $1.0 million associated with tax credits and other carryforward items in the U.S. and Europe. Of that amount, $0.2 million expires through 2046, and $0.8 million does not expire.
Included in deferred tax assets at June 30, 2026 is $16.0 million associated with NOL carryforwards in U.S. state and foreign jurisdictions. Of that amount, $1.6 million expires through 2031, $0.5 million expires through 2036, $0.6 million expires through 2041, $2.5 million expires through 2046, and the remaining $10.8 million does not expire. The realization of these tax benefits is primarily dependent on future taxable income in these jurisdictions.
A valuation allowance of $4.9 million has been placed against deferred tax assets primarily in U.S. state, Hong Kong and Vietnam jurisdictions, all of which would be allocated to income tax expense upon realization of the deferred tax assets. As the respective operations generate sufficient income, the valuation allowances will be partially or fully reversed at such time we believe it will be more likely than not that the deferred tax assets will be realized. In 2026, the valuation allowance related to these deferred tax assets decreased by $1.3 million.
We consider the majority of the $1.1 billion unremitted earnings of our non-U.S. subsidiaries to be permanently reinvested. With regard to these unremitted earnings, we have not, nor do we anticipate the need to, repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested earnings is not practicable due to our legal entity structure and the complexity of U.S. and local tax laws. With regard to the small portion of unremitted earnings that are not indefinitely reinvested, we maintain a deferred tax liability for foreign withholding and U.S. state income taxes. The deferred tax liability associated with unremitted earnings of our non-U.S. subsidiaries not permanently reinvested is $6.8 million as of June 30, 2026.
A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalty) is as follows as of June 30:
(in thousands)202620252024
Balance at beginning of year$1,694 $1,309 $6,935 
Increases for tax positions of prior years1,302 316— 
Increases for tax positions related to the current year3367779
Decreases related to lapse of statute of limitations(75)(140)(5,686)
Foreign currency translation(79)132 (19)
Balance at end of year$3,178 $1,694 $1,309 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate in 2026, 2025 and 2024 is $3.2 million, $1.7 million and $1.3 million, respectively.
Our policy is to recognize interest and penalties related to income taxes as a component of the provision for income taxes in the consolidated statements of income. We recognized an increase of $0.7 million and $0.1 million in 2026 and 2025, respectively and a decrease of $0.9 million in 2024. As of June 30, 2026 and 2025, the amount of penalty accrued was $0.1 million.
With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2019. The Internal Revenue Service has audited, or the statute of limitations has expired, for all U.S. tax years prior to 2023. Various state and foreign jurisdiction tax authorities are in the process of examining our income tax returns for various tax years ranging from 2019 to 2024. We continuously review our uncertain tax positions and evaluate any potential issues that may lead to an increase or decrease in the total amount of unrecognized tax benefits recorded.