v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
Note 18.        Income Taxes
The components of earnings (loss) before income taxes by jurisdiction were as follows ($000):
Year Ended June 30,202620252024
U.S. loss$(84,745)$(445,586)$(540,048)
Non-U.S. income932,478 539,767 392,401 
Earnings (loss) before income taxes$847,733 $94,181 $(147,647)
The components of the income tax expense (benefit) were as follows ($000):
Year Ended June 30,202620252024
Current:
Federal$3,366 $3,010 $10,119 
State4,903 1,733 181 
Foreign251,313 154,815 103,640 
Total Current259,582 159,558 113,940 
Deferred:
Federal(54,967)(50,454)(68,955)
State(1,633)(7,217)(186)
Foreign(142,133)(37,763)(33,682)
Total Deferred(198,733)(95,434)(102,823)
Total Income Tax Expense$60,849 $64,124 $11,117 

Principal items comprising deferred tax assets and liabilities were as follows ($000):
June 30,20262025
Deferred income tax assets
Inventory capitalization$74,414 $74,886 
Non-deductible accruals16,761 18,222 
Accrued employee benefits36,183 36,331 
Net-operating loss and credit carryforwards214,632 256,794 
Share-based compensation expense18,860 15,852 
Other9,225 9,564 
R&D capitalization215,663 168,998 
Deferred revenue12,194 15,376 
ROU asset64,962 37,785 
Book over tax accumulated depreciation6,321 — 
Valuation allowances(193,924)(163,678)
Total deferred income tax assets475,291 470,130 
Deferred income tax liabilities
Tax over book accumulated depreciation— (14,038)
Intangible assets(725,095)(863,484)
Interest rate cap(659)(4,000)
Tax on unremitted earnings(36,973)(63,383)
Outside basis differences(107,470)(142,781)
ROU liability(54,067)(31,239)
Other(22,203)(9,515)
Total deferred income tax liabilities(946,467)(1,128,440)
Net deferred income taxes$(471,176)$(658,310)
The reconciliation of income tax expense at the statutory U.S. federal rate to the reported income tax expense (benefit) in accordance with the guidance in ASU 2023-09 is as follows ($000):
Year Ended June 30,2026%
US Federal Statutory Tax Rate$178,024 21 
State and local income taxes, net of federal income tax effect (1)
1,694 — 
Foreign tax effects
China:
Research and development tax credit(13,245)(2)
Tax on foreign unremitted earnings(19,373)(2)
Withholding taxes11,206 1 
Other(1,996)— 
Germany:
State and local income taxes(11,029)(1)
Loss on sale of shares(16,142)(2)
Enacted changes in tax laws or rates(47,451)(6)
Other4,312 1 
Hong Kong:
Gain on sale of shares(11,242)(1)
Other(526)— 
Korea, Republic of (South):
Withholding taxes9,561 1 
Other(5,082)(1)
Switzerland:
Statutory tax rate difference between Switzerland and United States(13,938)(2)
State and local income taxes9,652 1 
Qualified domestic minimum top-up tax8,939 1 
Other4,039 1 
Other foreign jurisdictions11,186 1 
Effect of cross-border tax laws:
Global intangible low-taxed income16,837 2 
Other1,717 — 
Tax credits
Research and development tax credits(16,326)(2)
Changes in valuation allowances37,883 5 
Nontaxable or nondeductible items
Share-based payment awards(18,949)(2)
Other8,244 1 
Changes in unrecognized tax benefits(62,799)(7)
Other(4,347)(1)
$60,849 7 
(1) State taxes in California, Kentucky, and Indiana made up the majority (greater than 50 percent) of the tax effect in this category.
The reconciliation of income tax expense at the statutory U.S. federal rate to the reported income tax expense (benefit) in accordance with the guidance prior to the adoption of ASU 2023-09 is as follows ($000):
Year Ended June 30,2025%2024%
Taxes at statutory rate$19,778 21 $(31,006)21 
Increase (decrease) in taxes resulting from:
State income taxes-net of federal benefit(4,265)(5)(22)— 
Taxes on non U.S. earnings3,632 4 16,601 (11)
Valuation allowance20,295 22 43,866 (30)
U.S. branch income(1,216)(1)3,226 (2)
Noncontrolling interest4,284 4 1,002 (1)
Research and manufacturing incentive deductions and credits(26,396)(28)(41,387)28 
Stock compensation2,153 2 13,294 (9)
GILTI and FDII13,631 15 (629)— 
Uncertain tax positions6,814 7 3,301 (2)
Notional interest(10,174)(11)(2,521)2 
Assets held-for-sale36,895 39 — — 
Other(1,307)(1)5,392 (4)
$64,124 68 $11,117 (8)

The net income taxes paid (net of refunds received) by jurisdiction is as follows ($000):
June 30,2026
Federal$14,882 
State3,274 
Foreign
China66,107 
Germany28,368 
Switzerland24,894 
Sweden15,977 
Korea, Republic of (South)13,656 
Malaysia11,314 
Other29,657 
$208,129 
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. OBBBA includes provisions affecting various aspects of domestic and international taxation applicable to U.S. multinational corporations. The Company has evaluated the provisions effective for fiscal year 2026 and reflected the applicable impacts in its fiscal 2026 income tax provision. Certain provisions of OBBBA become effective in future years and the Company will continue to assess the impact of the legislation on future reporting periods.
The Company is partially permanently reinvested and will repatriate earnings for all non-U.S. subsidiaries with cash in excess of working capital needs. Such distributions could potentially be subject to U.S. state tax in certain states and foreign withholding taxes. Foreign currency gains (losses) related to the translation of previously taxed earnings from functional currency to U.S. dollars could also be subject to U.S. tax when distributed. The Company has estimated the associated withholding tax to be $37 million.
Additionally, the Company made a final accounting policy election to treat taxes due from future inclusions in U.S. taxable income related to global intangible low tax income (“GILTI”) as a current period expense when incurred.
During the fiscal years ended June 30, 2026, 2025, and 2024, cash paid by the Company for income taxes was $208 million, $167 million, and $97 million, respectively.
Our foreign subsidiaries in various tax jurisdictions operate under tax holiday arrangements. The impact of the tax holidays on our effective rate is a reduction in the rate of 0.9%, 11.6% and 5.6% for the fiscal years ended June 30, 2026, 2025 and 2024, respectively, and the impact of the tax holidays on diluted earnings per share is $0.04, $0.06, and $0.05 for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. The tax holiday related to Coherent Malaysia Sdn. Bhd. expired for certain business lines during the fiscal year ended June 30, 2026, and will expire for other business lines on July 31, 2028. The tax holiday related to certain business lines of II-VI Laser Enterprise Philippines, Inc. expired during the fiscal year ended June 30, 2026, while the tax holiday for other business lines will expire in December 2027. The 100% tax holiday related to Silicon Carbide Vietnam Limited Liability Company expired during the fiscal year ended June 30, 2026; however, a 50% tax holiday remains in effect through June 30, 2030. Similarly, the tax holiday related to certain business lines of Coherent Vietnam (Dong Nai) Company Limited expired during the fiscal year ended June 30, 2026; however, a 50% tax holiday remains in effect through June 30, 2030. In addition, the tax holiday related to certain business lines of Coherent Singapore Pte. Ltd. expired during the fiscal year ended June 30, 2026.
The Company has the following gross operating loss carryforwards and tax credit carryforwards as of June 30, 2026 ($000):
TypeAmountExpiration Date
Tax credit carryforwards:
Federal research and development credits$102,973 June 2037-June 2045
Foreign tax credits13,224 June 2030-June 2036
State tax credits13,354 June 2026-June 2040
State tax credits (indefinite)82,435 Indefinite
Operating loss carryforwards:
Loss carryforwards - federal$26,712 June 2027-June 2036
Loss carryforwards - federal (indefinite)1,539 Indefinite
Loss carryforwards - state350,496 June 2027-June 2046
Loss carryforwards - state (indefinite)72,869 Indefinite
Loss carryforwards - foreign15,715 June 2027-June 2041
Loss carryforwards - foreign (indefinite)32,883 Indefinite
The Company has recorded a valuation allowance against the majority of the foreign and state loss and credit carryforwards, certain U.S. credit carryforwards and the majority of state credit carryforwards. The Company’s U.S. federal loss carryforwards, federal research and development credit carryforwards, foreign tax credits, and certain state tax credits resulting from the Company’s acquisitions are subject to various annual limitations under Section 382 of the U.S. Internal Revenue Code.
Changes in the liability for unrecognized tax benefits for the fiscal years ended June 30, 2026, 2025 and 2024 were as follows ($000):
Year Ended June 30,202620252024
Beginning balance$124,008 $116,697 $115,180 
Increases in current year tax positions6,800 9,660 5,168 
Settlements— — (2,970)
Expiration of statute of limitations(67,049)(2,349)(681)
Ending balance$63,759 $124,008 $116,697 
The Company classifies all estimated and actual interest and penalties as income tax expense. During fiscal years 2026, 2025 and 2024, there was $(4.1) million, $2.0 million and $2.3 million of interest and penalties expense (benefit) within income tax expense, respectively. The Company had $5 million, $9 million and $7 million of interest and penalties accrued at June 30, 2026, 2025 and 2024, respectively. The Company has classified the uncertain tax positions as non-current income tax liabilities, as the amounts are not expected to be paid within one year. The majority of the liability can be offset by credit carryforwards and would not impact cash taxes. Including tax positions for which the Company determined that the tax position would not meet the more likely than not recognition threshold upon examination by the tax authorities based upon the technical merits of the position, the total estimated unrecognized tax benefit that, if recognized, would affect our effective tax rate, was approximately $8 million, $20 million and $19 million at June 30, 2026, 2025 and 2024, respectively. For the years ended June 30, 2026, June 30, 2025, and June 30, 2024, due to the U.S. valuation allowance, a large portion of our unrecognized tax benefit will no longer impact the tax rate if recognized. The Company expects a decrease of $3 million of unrecognized tax benefits during the next 12 months due to the expiration of statutes of limitation.
Fiscal years 2023 to 2026 remain open to examination by the Internal Revenue Service, fiscal years 2022 to 2026 remain open to examination by certain state jurisdictions, and fiscal years 2012 to 2026 remain open to examination by certain foreign taxing jurisdictions. The Company is currently under examination by the Internal Revenue Service for the fiscal year ended June 30, 2024; New York City for the years ended June 30, 2023 through June 30, 2024; New York for the years ended June 30, 2023 through June 30, 2024; Massachusetts for the year ended June 30, 2023; for certain subsidiary companies in Vietnam for the years ended June 30, 2017 through June 30, 2020; Singapore for the year ended June 30, 2023; United Kingdom for the years ended June 30, 2022 through June 30, 2023; and Germany for the years ended September 30, 2012 through June 30, 2021. The Company believes its income tax reserves for these tax matters are adequate.