v3.26.1
Income Taxes
 12 Months Ended
Jun. 27, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

13. Income Taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state, and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

The components of earnings before income taxes, by tax jurisdiction, are as follows:

 

 

For the Fiscal Year Ended

 

(In millions)

 

June 27, 2026

 

 

June 28, 2025

 

 

June 29, 2024

 

United States

 

$

479.0

 

 

$

461.6

 

 

$

579.6

 

Foreign

 

 

6.8

 

 

 

(2.8

)

 

 

17.2

 

Income before income tax expense

 

$

485.8

 

 

$

458.8

 

 

$

596.8

 

Income tax expense for fiscal 2026, fiscal 2025, and fiscal 2024 consisted of the following:

 

 

For the Fiscal Year Ended

 

(In millions)

 

June 27, 2026

 

 

June 28, 2025

 

 

June 29, 2024

 

Current income tax expense:

 

 

 

 

 

 

 

 

 

Federal

 

$

2.7

 

 

$

79.2

 

 

$

109.2

 

State

 

 

21.6

 

 

 

27.9

 

 

 

36.2

 

Foreign

 

 

10.2

 

 

 

11.7

 

 

 

4.8

 

Total current income tax expense

 

 

34.5

 

 

 

118.8

 

 

 

150.2

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

 

100.5

 

 

 

10.5

 

 

 

10.3

 

State

 

 

3.4

 

 

 

2.6

 

 

 

0.2

 

Foreign

 

 

(11.9

)

 

 

(13.3

)

 

 

0.2

 

Total deferred income tax expense (benefit)

 

 

92.0

 

 

 

(0.2

)

 

 

10.7

 

Total income tax expense, net

 

$

126.5

 

 

$

118.6

 

 

$

160.9

 

On July 4, 2025, Public Law No. 119-21, referred to as the One Big Beautiful Bill Act (the “Act”), was enacted into law. The Act includes changes to U.S. tax law that are applicable to the Company in fiscal 2025 and in future tax years, including 100% bonus depreciation on qualified property, immediate expensing of domestic research costs and modification of the business interest expense limitation. The effects of the Act result in a beneficial cash flow impact and minimal impact to the effective tax rate.

The Company has elected to adopt the guidance in ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), prospectively. For fiscal year 2026, ASU 2023-09 requires an expanded view of the rate reconciliation as well as a summary of income taxes paid in significant jurisdictions. The tables below represent the new standard for fiscal year 2026 and revert to prior guidance for comparative fiscal years.

A reconciliation of income taxes at the federal statutory corporate rate to the effective rate is as follows:

 

 

For the Fiscal Year Ended
June 27, 2026

 

(In millions)

 

Amount

 

 

Percent

 

US federal statutory income tax rate

 

$

102.0

 

 

 

21.0

%

State and local income taxes, net of federal income tax effect(1)

 

 

20.6

 

 

 

4.2

 

Foreign tax effects

 

 

3.4

 

 

 

0.7

 

Effect of cross-border tax laws

 

 

(0.2

)

 

 

—

 

Tax credits:

 

 

 

 

 

 

Foreign tax credit

 

 

(7.6

)

 

 

(1.6

)

Other

 

 

(3.8

)

 

 

(0.8

)

Changes in valuation allowance

 

 

6.3

 

 

 

1.3

 

Nontaxable or nondeductible items:

 

 

 

 

 

 

Stock-based compensation

 

 

(11.0

)

 

 

(2.3

)

Non-deductible compensation

 

 

9.4

 

 

 

1.9

 

Other

 

 

7.4

 

 

 

1.6

 

Changes in unrecognized tax benefits

 

 

—

 

 

 

—

 

Effective income tax rate

 

$

126.5

 

 

 

26.0

%
(1)
State taxes in California, Florida, Tennessee, Texas, and Oregon make up the majority of the tax effect in this category.

The Company’s effective income tax rate for continuing operations for fiscal 2025 and fiscal 2024 was 25.8% and 27.0%, respectively. Actual income tax expense differs from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in fiscal 2025 and fiscal 2024 to earnings before income taxes as follows:

 

 

For the Fiscal Year Ended

 

(In millions)

 

June 28, 2025

 

 

June 29, 2024

 

Federal income tax expense computed at statutory rate

 

$

96.3

 

 

$

125.3

 

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

State income taxes, net of federal income tax benefit

 

 

27.3

 

 

 

30.0

 

Non-deductible expenses and other

 

 

15.3

 

 

 

10.9

 

Valuation allowance

 

 

7.5

 

 

 

(0.6

)

Foreign taxes

 

 

4.3

 

 

 

5.2

 

Tax credits

 

 

(18.9

)

 

 

(5.8

)

Stock-based compensation

 

 

(13.7

)

 

 

(4.5

)

Other

 

 

0.5

 

 

 

0.4

 

Total income tax expense, net

 

$

118.6

 

 

$

160.9

 

 

The Company’s income taxes paid (net of refunds received), are as follows:

(In millions)

 

For the Fiscal Year Ended
June 27, 2026

 

Federal

 

$

(23.2

)

US state and local:

 

 

 

California

 

 

2.6

 

Texas

 

 

1.6

 

Oregon

 

 

1.3

 

North Carolina

 

 

1.0

 

Minnesota

 

 

1.0

 

Michigan

 

 

0.9

 

New York

 

 

0.9

 

Illinois

 

 

0.9

 

New Jersey

 

 

0.8

 

South Carolina

 

 

0.7

 

Massachusetts

 

 

0.7

 

Kentucky

 

 

0.6

 

Tennessee

 

 

0.5

 

Other

 

 

3.8

 

Total US state and local

 

 

17.3

 

Foreign:

 

 

 

Puerto Rico

 

 

11.3

 

Canada

 

 

2.8

 

Other

 

 

0.3

 

Total foreign

 

 

14.4

 

Income taxes (net of refunds received)

 

$

8.5

 

Deferred income taxes are recorded based upon the tax effects of differences between the financial statement and tax bases of assets and liabilities and available tax loss and credit carryforwards. Temporary differences and carry-forwards that created significant deferred tax assets and liabilities were as follows:

(In millions)

 

As of
June 27, 2026

 

 

As of
June 28, 2025

 

Deferred tax assets:

 

 

 

 

 

 

Lease obligations

 

$

170.2

 

 

$

151.5

 

Accrued employee benefits

 

 

25.0

 

 

 

26.9

 

Tax credit carry-forwards

 

 

17.4

 

 

 

9.8

 

Allowance for doubtful accounts

 

 

13.6

 

 

 

13.5

 

Other assets, including interest expense limitation

 

 

10.3

 

 

 

23.2

 

Insurance reserves

 

 

10.2

 

 

 

7.1

 

Stock-based compensation

 

 

7.1

 

 

 

7.5

 

Net operating loss carry-forwards

 

 

6.5

 

 

 

7.2

 

Other comprehensive income

 

 

1.1

 

 

 

0.9

 

Total gross deferred tax assets

 

 

261.4

 

 

 

247.6

 

Less: Valuation allowance

 

 

(19.0

)

 

 

(11.8

)

Total net deferred tax assets

 

 

242.4

 

 

 

235.8

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment

 

 

606.7

 

 

 

502.5

 

Basis difference in intangible assets

 

 

312.7

 

 

 

345.8

 

 Right of use assets

 

 

163.1

 

 

 

144.4

 

Inventories

 

 

104.3

 

 

 

101.9

 

Prepaid expenses

 

 

26.2

 

 

 

24.0

 

Other Liabilities

 

 

4.2

 

 

 

4.3

 

Total deferred tax liabilities

 

 

1,217.2

 

 

 

1,122.9

 

Total net deferred income tax liability

 

$

974.8

 

 

$

887.1

 

 

A valuation allowance has been provided against certain tax credit carryforwards and certain net operating losses which are not likely to be realized due to limitations on utilization. The Company believes that it is more likely than not that the remaining deferred tax assets will be realized.

As of June 27, 2026, substantially all federal, state and local, and foreign income tax matters have been concluded for years prior to fiscal year 2022.

We intend to indefinitely reinvest income of our foreign operations and, as a result, no material accruals have been made with respect to the tax effects of unremitted earnings from these reinvested foreign earnings, including impacts of outside basis differences and withholding taxes.

Since the Organization for Economic Co-operation and Development (“OECD”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“Framework”) in 2021, a number of countries have begun to enact legislation to implement the Framework, including the Pillar Two minimum tax regime. Of the regions in which we operate, Canada has implemented the Pillar Two framework effective January 1, 2024. Our subsidiaries were not subject to Pillar Two minimum tax in fiscal 2026 under the applicable safe harbor rules. The Company continues to monitor legislative developments in the regions in which we operate and to evaluate the potential impact of the Framework on future periods.