v3.26.1
Income Taxes
 12 Months Ended
Jun. 27, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
Note 13. Income Taxes
Our loss before income taxes consisted of the following (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Domestic$(8,018.7)$(174.4)$(219.6)
Foreign845.9 2.3 (186.1)
Loss before income taxes$(7,172.8)$(172.1)$(405.7)
Our income tax (benefit) provision consisted of the following (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Federal:
      Current$0.2 $(8.4)$(10.6)
      Deferred(226.9)— 124.0 
(226.7)(8.4)113.4 
State:
      Current1.4 1.8 1.3 
      Deferred(69.6)— (8.0)
(68.2)1.8 (6.7)
Foreign:
      Current55.5 55.5 52.1 
      Deferred1.7 (246.9)(18.0)
57.2 (191.4)34.1 
Total income tax (benefit) provision$(237.7)$(198.0)$140.8 
The following table reconciles the income tax benefit recorded for fiscal year 2026 to the amount computed by applying the U.S. federal statutory income tax rate of 21% to loss before income taxes after the adoption of ASU 2023-09 (in millions, except percentages):
Year Ended June 27, 2026
AmountPercentage
Income tax benefit computed at U.S. federal statutory rate$(1,506.3)21.0 %
State and local income tax, net of federal income tax effect (1)
(70.3)1.0 
Foreign tax effects
    Switzerland
        Income not subject to local corporate income tax(138.1)1.9 
        Other(2.2)0.0 
    Other foreign jurisdictions7.5 (0.1)
Effects of cross-border tax laws
    GILTI100.6 (1.4)
    Other(23.0)0.3 
Tax credits(37.8)0.5 
Changes in valuation allowances(181.4)2.5 
Nontaxable or nondeductible items
    Nondeductible loss on extinguishment of debt1,628.6 (22.7)
    Other(36.1)0.5 
Changes in unrecognized tax benefits14.5 (0.2)
Other adjustments6.3 (0.1)%
Total income tax benefit$(237.7)3.2 %

(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California and Georgia.
Prior to our adoption of ASU 2023-09, the reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate for fiscal year 2025 and 2024 was presented as follows (in millions):
Years Ended
June 28, 2025June 29, 2024
Income tax provision computed at federal statutory rate$(36.1)$(85.2)
Foreign rate differential(49.9)58.9 
Change in valuation allowance(161.5)150.1 
Tax credits(2.2)(1.8)
Stock-based compensation22.3 17.8 
Permanent items0.3 (3.2)
Transaction costs— 1.3 
Subpart F and GILTI22.4 0.2 
Unrecognized tax benefits8.5 11.7 
Change in Tax Rates0.5 (9.9)
BEAT
— — 
Audit settlement(4.4)— 
State taxes1.9 — 
Other0.2 0.9 
Total income tax (benefit) provision$(198.0)$140.8 
Effective tax rate115.04 %(34.71)%
Our benefit for income taxes for fiscal year 2026 differs from the 21% U.S. statutory rate primarily due to the non-deductible loss on debt extinguishment and the income tax expense on U.S. income inclusions from GILTI and Subpart F, partially offset by the income tax benefit associated with the release of valuation allowances on certain U.S. deferred tax assets.
Our benefit for income taxes for fiscal year 2025 differs from the 21% U.S. statutory rate primarily due to the income tax benefit associated with the release of a valuation allowance on our U.K. deferred tax assets, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate, partially offset by the income tax expense from U.S. income inclusions from Subpart F and GILTI, non-deductible stock-based compensation and changes in unrecognized tax benefits.
Our provision for income taxes for fiscal year 2024 differs from the 21% U.S. statutory rate primarily due to the income tax expense associated with the recognition of a valuation allowance on our U.S. federal and state deferred tax assets, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate and non-deductible stock-based compensation. Additionally, our provision for income taxes includes changes in unrecognized tax benefits, partially offset by the income tax benefit from a change in the applicable statutory income tax rate in certain jurisdictions.
The components of our net deferred taxes consisted of the following (in millions):
Years Ended
June 27, 2026June 28, 2025
Gross deferred tax assets:
      Intangibles$22.8 $20.3 
      Tax credit carryforwards149.1 143.2 
      Net operating loss carryforwards187.4 232.1 
      Inventories9.8 14.9 
      Accruals and reserves42.7 28.1 
      Fixed assets22.6 17.2 
      Capital loss carryforwards13.7 11.2 
      Capitalized and unclaimed R&D expenditure 239.5 178.1 
      Convertible notes22.1 — 
      Stock-based compensation7.5 8.9 
      Lease liabilities7.1 7.5 
      Other1.0 2.4 
      Gross deferred tax assets725.3 663.9 
      Valuation allowance(189.0)(440.8)
Deferred tax assets536.3 223.1 
Gross deferred tax liabilities:
      Intangible amortization(3.0)(10.5)
      Right-of-use assets(5.9)(5.8)
      Inventories(3.0)(3.6)
      Other(0.6)(0.1)
Deferred tax liabilities(12.5)(20.0)
Total net deferred tax assets$523.8 $203.1 
We regularly assess our ability to realize our deferred tax assets on a quarterly basis and will establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including our earnings history and results of recent operations, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. In fiscal year 2026, after considering both positive and negative evidence, we determined that there is sufficient objectively verifiable positive evidence to conclude that it is more-likely-than-not that our U.S. deferred tax assets are realizable in the future. As a result, we released a valuation allowance against such deferred tax assets except for the federal foreign tax credit carryforwards and California research and development credit carryforwards, resulting in an income tax benefit of $236.3 million.
We continue to maintain our valuation allowance on Canada deferred tax assets, and a partial valuation allowance on our U.K. deferred tax asset. The total valuation allowance against our deferred tax assets decreased by $251.7 million in fiscal year 2026. We will continue to assess the realizability of our remaining deferred tax assets and may increase or decrease our valuation allowance in the future. Any such change will be recognized as a component of the provision for income taxes in the period in which the change in assessment occurs.
As of June 27, 2026, we had federal, state and foreign net operating loss carryforwards of $100.1 million, $176.4 million, and $686.2 million respectively. These carryforwards will begin to expire in the fiscal year ending 2027. The federal and foreign tax attributes carried forward are subject to various rules which impose limitations on the utilization. Additionally, we have federal, state, and foreign research and other tax credit carryforwards of $52.8 million, $99.5 million, and $34.5 million, respectively. The federal credits will begin to expire in the fiscal year ending 2027 and California credits can be carried forward indefinitely. The foreign tax credits will begin to expire in the fiscal year ending 2027. Our U.S. federal and state net operating loss and credit carryforwards are subject to annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code and similar state provisions.
We have certain tax incentives with respect to our operations in China. These tax incentives require compliance with certain conditions and have expired at various dates through calendar year 2025. In fiscal year 2026, 2025 and 2024, the impact of these tax incentives reduced our income tax expense by $0.0 million, or $0.00 per share, $0.5 million, or $0.01 per share, and $3.1 million or $0.05 per share respectively.
Certain of our Thailand operations are eligible for corporate income tax exemptions under incentives granted by the Thailand Board of Investment (“BOI”). During fiscal year 2026, we concluded that we satisfied the substantive requirements to qualify for exemptions relating to two BOI-promoted projects for fiscal year 2025, and three BOI-promoted projects for fiscal year 2026. In fiscal years 2026, 2025 and 2024, the impact of these tax incentives reduced our income tax expense by $1.9 million, or 0.03 per share; $1.9 million, or 0.03 per share; and $0.0 million, or $0.00 per share respectively.
Current U.S. tax law generally provides greater flexibility for us to access and utilize our cash held by certain of our foreign subsidiaries. We intend to repatriate all or a portion of the earnings of our subsidiaries in the Cayman Islands, the British Virgin Islands and Hong Kong as wells as certain subsidiaries in China and Japan and intend to indefinitely reinvest the earnings of our other foreign subsidiaries. Accordingly, U.S. income taxes and foreign withholding taxes have not been provided on approximately $44.1 million of undistributed earnings of the foreign subsidiaries for which we have asserted indefinite reinvestment. If those earnings were repatriated, we estimate that approximately $4.7 million of additional foreign withholding taxes would be incurred before consideration of any foreign tax credits or deductions that may be available to reduce U.S. income tax liabilities.
The aggregate changes in the balance of our unrecognized tax benefits between June 28, 2025 and June 27, 2026 are as follows (in millions):
Balance as of July 1, 2023$113.9 
Increases based on tax positions related to prior year19.6 
Decreases based on tax positions related to prior year(9.4)
Decreases related to Statute of Limitations(24.8)
Additions based on tax positions related to current year7.3 
Increases due to acquisition
9.1 
Balance as of June 29, 2024$115.7 
Increases based on tax positions related to prior year10.4 
Decreases based on tax positions related to prior year(4.9)
Decreases related to Statute of Limitations(13.6)
Additions based on tax positions related to current year14.8 
Increases due to acquisition
4.4 
Decreases due to audit settlement(13.9)
Decreases due to reclass(14.3)
Balance as of June 28, 2025$98.6 
Increases based on tax positions related to prior year1.1 
Decreases based on tax positions related to prior year(2.5)
Decreases related to Statute of Limitations(4.8)
Additions based on tax positions related to current year16.2 
Decrease due to divestitures(0.2)
Balance as of June 27, 2026$108.4 
As of June 27, 2026, we had $93.8 million of unrecognized tax benefits, which, if recognized, would affect the effective tax rate. We are subject to examination of income tax returns by various domestic and foreign tax authorities. The timing of resolutions and closures of tax audits is highly unpredictable. Although it is possible that certain tax audits may be concluded within the next 12 months, we cannot reasonably estimate the impact to tax expense and net income from tax exams that could be resolved or closed within next 12 months. However, we believe that we have adequately provided under GAAP for potential audit outcomes. Subject to audit timing and uncertainty, we expect the amount of unrecognized tax benefit that would become recognized due to expiration of the statute of limitations and affect the effective tax rate to be $4.5 million over the next 12 months.
Our 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 and June 28, 2025 were $14.8 million and $12.5 million, respectively.
The major tax jurisdictions where we file tax returns are the U.S. federal government, the state of California, Japan, the United Kingdom, Thailand, China and Canada. As of June 27, 2026, our fiscal years 2012 to 2025 tax returns are open to potential examination in one or more jurisdictions. In addition, certain net operating loss and credit carryforwards may extend the ability of the tax authorities to examine our tax returns beyond the regular limits.
The amounts of cash income taxes paid by us were as follows (in millions):
Year Ended
June 27, 2026
Federal$12.3 
State and Local1.2 
Foreign
    Thailand12.2 
    Switzerland11.0 
    Japan4.6 
    China4.5 
    All other foreign 0.9 
Income taxes, net of amounts refunded$46.7