v3.26.1
Income Taxes
 12 Months Ended
Jun. 27, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14. Income Taxes
The Company’s (loss) income before income taxes consisted of the following (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Domestic$(119.7)$(88.8)$(95.8)
Foreign136.0 127.4 107.4 
Income before income taxes and equity investment earnings$16.3 $38.6 $11.6 
The Company’s income tax (benefit) expense consisted of the following (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Federal:
Current$— $— $0.3 
Deferred— (23.2)— 
Total federal income tax (benefit) expense — (23.2)0.3 
State:
Current(0.4)(7.7)3.3 
Deferred— (1.8)— 
Total state income tax (benefit) expense (0.4)(9.5)3.3 
Foreign:
Current38.4 41.0 32.8 
Deferred9.5 (3.9)1.0 
Total foreign income tax expense 47.9 37.1 33.8 
Total income tax expense$47.5 $4.4 $37.4 
The foreign current expense primarily relates to the Company’s profitable operations in certain foreign jurisdictions. The foreign deferred tax expense primarily relates to the remeasurement of German deferred tax assets and liabilities as a result of changes in the applicable German tax rates.
A reconciliation of the Company’s income tax expense at the federal statutory rate to the income tax expense at the effective tax rate is as follows (in millions):
June 27, 2026
AmountPercent
U.S. federal statutory income tax rate$3.4 21.0 %
State and local income taxes, net of federal income tax effect(1)
0.1 0.5 %
Foreign tax effects:
China:
Statutory tax rate difference between China and United States3.8 23.6 %
Withholding taxes3.5 21.2 %
Other(0.4)(2.5)%
Germany:
Remeasurement of deferred tax assets and liabilities7.2 43.9 %
Other1.3 8.1 %
Other jurisdictions 3.1 19.6 %
Effect of cross-border tax laws:
U.S. inclusion of foreign earnings4.1 24.8 %
Changes in valuation allowances15.8 96.6 %
Tax credits(0.3)(2.1)%
Nontaxable or nondeductible items:
Fair value change of contingent consideration6.9 42.5 %
Disallowed compensation3.7 22.5 %
Stock-based compensation(5.0)(30.7)%
Permanent adjustments - other1.1 7.6 %
Changes in unrecognized tax benefits(0.8)(5.2)%
Effective tax rate$47.5 291.4 %
(1) The tax effect in this category primarily reflects state and local income taxes in Kansas, Maryland and Wisconsin.
A reconciliation of the Company’s income tax expense at the federal statutory rate to the income tax expense at the effective tax rate is as follows (in millions):
Years ended
June 28, 2025June 29, 2024
Income tax expense computed at federal statutory rate$8.1 $2.4 
Withholding taxes4.7 5.6 
U.S. inclusion of foreign earnings4.7 3.8 
Internal restructuring — 1.2 
Valuation allowance(14.4)17.5 
Foreign rate differential4.5 3.8 
Reserves(5.4)1.2 
Permanent items0.1 (0.6)
Fair value change of the contingent consideration(1.7)(2.0)
Impact of prior years’ taxes0.5 3.0 
Research and experimentation benefits and other tax credits(1.7)— 
State taxes1.6 — 
Disallowed compensations3.2 2.0 
Acquisition costs0.5 — 
Other(0.3)(0.5)
Income tax expense$4.4 $37.4 
The components of the Company’s net deferred taxes consisted of the following (in millions):
Balance as of
June 27, 2026June 28, 2025June 29, 2024
Gross deferred tax assets:
Tax credit carryforwards$143.2 $140.5 $138.2 
Net operating loss carryforwards240.2 337.9 381.0 
Capital loss carryforwards1.1 1.1 1.0 
Inventories63.1 48.9 37.2 
Accruals and reserves60.7 54.9 53.0 
Intangibles including acquisition related items 439.6 461.8 510.6 
Capitalized research costs411.3 355.6 312.3 
Other56.8 48.3 43.5 
Gross deferred tax assets1,416.0 1,449.0 1,476.8 
Valuation allowance(1,238.9)(1,266.3)(1,336.0)
Deferred tax assets177.1 182.7 140.8 
Gross deferred tax liabilities:
Acquisition related items(53.8)(54.1)(29.4)
Tax on unrepatriated earnings(5.0)(4.9)(9.5)
Foreign branch tax adjustments(30.2)(25.2)(14.6)
Other(20.5)(17.4)(16.5)
Deferred tax liabilities(109.5)(101.6)(70.0)
Total net deferred tax assets$67.6 $81.1 $70.8 
As of June 27, 2026, the Company had federal, state and foreign tax net operating loss carryforwards of $798.8 million, $273.8 million and $449.9 million, respectively, and federal and state research tax credit carryforwards of $85.9 million and $56.6 million, respectively. The federal tax net operating loss carryforwards start to expire in fiscal 2027 and at various dates through 2038, if not utilized. The federal research tax credit carryforwards start to expire in fiscal 2027, and at various dates through fiscal 2045, if not utilized. The state tax net operating loss carryforwards start to expire in fiscal 2027 and at various dates through 2045, if not utilized. The state research tax credit starts to expire in fiscal 2027, but a majority of the state credits have an indefinite carryforward period. In addition, a portion of the foreign tax net operating loss and capital loss carryforwards have an indefinite carryforward period. Utilization of the tax net operating losses may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state and foreign provisions. Loss carryforward limitations may result in the expiration or reduced utilization of a portion of the Company’s net operating losses.
During fiscal 2024, the Company completed a series of planned internal transactions between subsidiaries within the group to optimize our ability to repatriate earnings back to the U.S. As a result of these transactions, the Company is able to reduce the amount of withholding tax that will be accrued on current and future earnings. The tax expense of these transactions was approximately $1.2 million.
Foreign withholding taxes associated with the repatriation of earnings of certain foreign subsidiaries have not been provided because the Company intends to reinvest these earnings indefinitely outside of the U.S. The Company estimates that an additional $1.6 million of foreign withholding taxes would have to be provided if these earnings were repatriated back to the U.S.
The valuation allowance decreased by $27.4 million in fiscal 2026, decreased by $69.7 million in fiscal 2025, and decreased by $15.5 million in fiscal 2024. The decrease during fiscal 2026 was primarily due to the expiration and utilization of federal net operating losses (NOLs) and amortization of intangibles assets, offset by an increase in the capitalization of federal research expenditures in the U.S. The decrease during fiscal 2025 was primarily due to the increase in the deferred tax liability that resulted from the acquisition of Inertial Labs and the expiration of NOLs in the U.S. The decrease during fiscal 2024 was primarily due to the amortization of intangibles assets and utilization of NOLs, offset by an increase in the capitalization of federal research expenditures in the U.S.
The following table provides information about the activity of our deferred tax valuation allowance (in millions):
Deferred Tax Valuation AllowanceBalance at
Beginning
of Period
Additions Charged
to Expenses or
Other Accounts(1)
Deductions Credited to Expenses or Other Accounts(2)
Balance at
End of
Period
Year Ended June 27, 2026$1,266.3 $91.7 $(119.1)$1,238.9 
Year Ended June 28, 20251,336.0 78.3 (148.0)1,266.3 
Year Ended June 29, 20241,351.5 132.7 (148.2)1,336.0 
(1) Additions include current year additions charged to expenses and current year build due to increases in net deferred tax assets, return to provision true-ups, and other adjustments.
(2) Deductions include current year releases credited to expenses and current year reductions due to decreases in net deferred tax assets, return to provision true-ups, other adjustments and increases in deferred tax liabilities.
A reconciliation of unrecognized tax benefits between July 1, 2023 and June 27, 2026 is as follows (in millions):
Balance at July 1, 2023$54.9 
Additions based on tax positions related to current year1.2 
Additions based on tax positions related to prior year0.5 
Reductions based on tax positions related to prior year(1.9)
Reductions for lapse of statute of limitations(0.2)
Balance at June 29, 202454.5 
Additions based on tax positions related to current year2.2 
Additions based on tax positions related to prior year0.1 
Reductions based on tax positions related to prior year(4.1)
Reductions for lapse of statute of limitations(6.5)
Balance at June 28, 202546.2 
Additions based on tax positions related to current year1.9 
Additions based on tax positions related to prior year— 
Reductions based on tax positions related to prior year(1.3)
Reductions for lapse of statute of limitations(1.9)
Balance at June 27, 2026$44.9 
The unrecognized tax benefits relate primarily to the allocations of revenue and costs among the Company’s global operations and the validity of some U.S. tax credits. Included in the balance of unrecognized tax benefits at June 27, 2026 is $7.1 million of tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits at June 27, 2026 is $33.9 million of tax benefits that, if recognized, would result in adjustments to the valuation allowance.
The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits within the income tax provision. The amount of interest and penalties accrued as of June 27, 2026, June 28, 2025 and June 29, 2024 were approximately $3.0 million, $3.4 million and $3.8 million, respectively. The timing and resolution of income tax examinations is uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued for each year.
The Company is routinely subject to various federal, state and foreign audits by taxing authorities. The Company believes that adequate amounts have been provided for any adjustments that may result from these examinations.
The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of June 27, 2026:
Tax JurisdictionsTax Years
United States(1)
2006 and onward
Canada2024 and onward
China2021 and onward
France2023 and onward
Germany2018 and onward
Korea2019 and onward
United Kingdom2024 and onward
(1) Although the Company is generally subject to a three-year statute of limitations in the U.S., tax authorities maintain the ability to adjust tax attribute carryforwards generated in earlier years.

The following table presents income taxes paid, net of refunds received (in millions):
Year ended
June 27, 2026
Income taxes paid (net of refund)
Federal$— 
State0.3 
Foreign
Canada2.2 
China27.4 
United Kingdom(10.8)
Other countries4.7 
Total cash paid for income taxes, net of refunds$23.8