v3.26.1
Income Taxes
 12 Months Ended
Jun. 28, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective June 30, 2025, the Company adopted the new income tax disclosure standard (ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures) on a prospective basis. Accordingly, the tables presenting the Company's income tax provision and effective tax rate reconciliation reflect the new standard for the periods from June 30, 2025 to September 29, 2025 and the period from September 30, 2025 to June 28, 2026, while fiscal year 2025 and Fiscal year 2024 disclosures will continue to follow the previous disclosure requirements.
The following table presents the reconciliation of the statutory U.S. federal income tax rate to the effective tax rate, pursuant to the disclosure requirements of ASU 2023-09:
SuccessorPredecessor
Period from September 30, 2025 to June 28, 2026Period from June 30, 2025 to September 29, 2025
(in millions of U.S. Dollars, except for percentages)AmountPercentAmountPercent
U.S. Federal Statutory Tax Rate($87.0)21.0 %$89.0 21.0 %
Nontaxable or Nondeductible items:
Transaction fees— — %14.6 3.5 %
Stock compensation— — %21.9 5.2 %
Effects of restructuring— — %60.0 14.1 %
Changes in valuation allowances88.4 (21.3)%(186.2)(44.0)%
Other(1.2)0.3 %3.8 0.9 %
State and Local Income Taxes, Net of Federal Income Tax Effect(1)
0.1 — %— — %
Foreign Tax Effects1.1 (0.3)%0.4 0.1 %
Income tax expense and effective tax rate$1.4 (0.3)%$3.5 0.8 %
(1): The states that contributed greater than 50% of the tax effect in this category include California and Massachusetts.
The following table presents the reconciliation of the statutory U.S. federal income tax rate to the effective tax rate for the years ended June 29, 2025 and June 30, 2024, prior to the adoption of ASU 2023-09:
Predecessor
Fiscal Year Ended June 29, 2025Fiscal Year Ended June 30, 2024
(in millions of U.S. Dollars)AmountPercentAmountPercent
Federal income tax provision at statutory rate($340.0)21 %($120.2)21 %
(Decrease) increase in income tax expense resulting from:
State tax provision, net of federal benefit(13.8)1 %(5.0)1 %
Tax exempt interest(0.1)— %(0.4)— %
(Decrease) increase in tax reserve(0.4)— %(2.0)— %
Research and development credits(7.3)1 %(9.7)2 %
Increase (decrease) in valuation allowance309.1 (19)%127.0 (22)%
Stock-based compensation14.2 (1)%8.8 (2)%
Statutory rate differences0.1 — %— — %
Foreign earnings taxed in U.S.3.5 — %0.4 — %
Goodwill Impairment23.1 (1)%— — %
Provision to return adjustments0.9 — %(0.4)— %
Impact of rate changes(3.4)— %0.4 — %
Expiration of attributes0.1 — %2.0 — %
Pre-petition charges4.1 — %— — %
Other0.2 — %0.2 — %
Income tax (benefit) expense and effective tax rate($9.7)1 %$1.1 — %
Income taxes paid in federal, state and foreign jurisdictions are immaterial.
The following were the components of (loss) income before income taxes:
SuccessorPredecessor
(in millions of U.S. Dollars)Period from September 30, 2025 to June 28, 2026Period from June 30, 2025 to September 29, 2025Fiscal Year Ended June 29, 2025Fiscal Year Ended June 30, 2024
Domestic($419.7)$431.4 ($1,619.2)($572.2)
Foreign5.3 (7.7)0.3 (0.3)
(Loss) income before income taxes($414.4)$423.7 ($1,618.9)($572.5)
The following were the components of income tax (benefit) expense:
SuccessorPredecessor
(in millions of U.S. Dollars)Period from September 30, 2025 to June 28, 2026Period from June 30, 2025 to September 29, 2025Fiscal Year Ended June 29, 2025Fiscal Year Ended June 30, 2024
Current:
Federal$— $0.1 $— $— 
Foreign0.8 0.1 0.6 0.9 
State— — — 0.2 
Total current0.8 0.2 0.6 1.1 
Deferred:
Federal0.9 3.2 (10.5)— 
Foreign(0.4)— 0.5 — 
State0.1 0.1 (0.3)— 
Total deferred(1)
0.6 3.3 (10.3)— 
Income tax expense (benefit)$1.4 $3.5 ($9.7)$1.1 
(1): For the period ended September 29, 2025, expenses included $2.3 million impact from fresh start accounting and implementation of the Plan. See Note 4, "Fresh Start Accounting," for further information.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
SuccessorPredecessor
(in millions of U.S. Dollars)June 28, 2026June 29, 2025
Deferred tax assets:
Compensation$5.9 $8.3 
Inventories41.0 45.3 
Sales return reserve and allowance for bad debts11.3 8.1 
Federal and state net operating loss carryforwards133.0 691.0 
Federal income tax credits79.2 77.0 
State income tax credits0.7 0.7 
48C investment tax credits35.7 35.7 
Property and Equipment534.4 — 
Investments0.3 0.6 
Stock-based compensation5.9 9.0 
Deferred revenue16.5 25.0 
Lease liabilities24.0 35.1 
Capitalized research and development63.5 120.1 
Convertible notes— 58.5 
Nondeductible interest carryforward115.9 95.3 
Other7.4 14.1 
Total gross deferred assets1,074.7 1,223.8 
Less valuation allowance(930.6)(1,041.4)
Deferred tax assets, net144.1 182.4 
Deferred tax liabilities:
Property and equipment— (122.4)
Intangible assets(85.2)(5.0)
Other long-term investments— (9.0)
Prepaid taxes(0.5)(0.5)
Foreign earnings recapture(4.2)(4.2)
Taxes on unremitted foreign earnings(1.0)(7.0)
Lease assets(21.8)(29.1)
Convertible notes and debt(32.2)— 
Other— (4.6)
Total gross deferred liability(144.9)(181.8)
Deferred tax liability, net($0.8)$0.6 
The components giving rise to the net deferred tax assets (liabilities) have been included in the consolidated balance sheets as follows:
Successor
Balance at June 28, 2026
(in millions of U.S. Dollars)AssetsLiabilities
U.S. federal income taxes$— ($1.9)
Foreign income taxes1.1 — 
Total$1.1 ($1.9)
Predecessor
Balance at June 29, 2025
(in millions of U.S. Dollars)AssetsLiabilities
U.S. federal income taxes$— ($0.5)
Foreign income taxes1.1 — 
Total$1.1 ($0.5)
The Company weighs all available evidence, both positive and negative, to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets by jurisdiction. Primarily as the result of significant cumulative losses, the Company has concluded that it is necessary to recognize a full valuation allowance against its United States deferred tax assets as of June 28, 2026. As of June 28, 2026 and June 29, 2025, the United States valuation allowance was $930.4 million and $1,041.3 million, respectively. For the fiscal year ended June 28, 2026, the Company decreased the United States valuation allowance by $110.9 million largely due to decreases in net operating loss carryforwards as the result of tax cancellation of debt ("COD") Income offset by increases in deferred tax assets related to property and equipment and interest carryforwards. The Company has a full valuation allowance against its state deferred tax assets and an immaterial valuation allowances against deferred tax assets in international jurisdictions.
As of June 28, 2026, the Company had approximately $615.7 million of federal net operating loss carryovers which are fully offset by liabilities for unrecognized tax benefits and valuation allowance. The Company's federal net operating loss carryovers have no carry forward expiration limitation. The Company has $198.1 million of state net operating loss carryovers which are fully offset due to a valuation allowance. The Company's state net operating loss carryovers begin to expire in fiscal 2027. Additionally, the Company had $118.9 million of federal credit carryforwards, which are fully offset by liabilities for unrecognized tax benefits and a valuation allowance, and $0.7 million of state income tax credit carryforwards, which are fully offset by a valuation allowance. The federal and state income tax credit carryforwards will begin to expire in fiscal 2031 and fiscal 2027, respectively. As of June 28, 2026, the Company had approximately $2.2 million of foreign net operating loss carryovers, of which $0.4 million are offset by a valuation allowance. The Company's foreign net operating loss carryovers have no carry forward limitation.
As discussed in Note 3 – Emergence from Voluntary Reorganization under Chapter 11, the implementation of the Plan resulted in the discharge of indebtedness which gave rise to approximately $3.4 billion of COD income for U.S. federal income tax purposes which was excluded from taxable income. The exclusion from taxable income under Section 108 of the Internal Revenue Code of 1986, as amended (the "Code") resulted in the Company reducing its gross net operating loss by $3.4 billion. For U.S. federal income tax purposes, the Plan did not result in the close of its tax year. For U.S. federal income tax purposes, the reduction was first applied to the fiscal 2026 tax year loss, which includes both predecessor and successor periods, and then to the earliest available net operating loss. While for U.S. GAAP purposes the implementation of the Plan resulted in fair market value adjustments to the Company's basis in assets, for U.S. federal income tax purposes, the adjustments were limited to the reductions to tax attributes pursuant Section 108 discussed above. As a result, the Fresh Start Adjustments discussed in Note 3 - Emergence from Voluntary Reorganization under Chapter 11 generally resulted in an increase to the Company’s deferred tax assets, offset by a change in valuation allowance.
During the fiscal year ended June 28, 2026, as part of the restructuring under the Plan, the Company experienced an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). As a result, the Company’s ability to utilize its U.S. federal NOL and certain other tax attributes arising before the ownership change is subject to annual limitations.
The Company has analyzed the effect of this ownership change and expects that certain tax credit carryforwards and state net operation losses may expire unused. Future changes in the Company’s stock ownership, including those that may be outside the
Company’s control, could result in additional ownership changes under Section 382, which may further limit the Company’s ability to utilize its NOLs and other tax attributes.
In July 2025, the "One Big Beautiful Bill Act" (the "OBBBA") was enacted, making multiple changes to federal income tax laws that affect US federal income taxes of non-US operations and the timing of deductions related to 100% bonus deprecation, expense of domestic research and development costs, and interest. As the result of implementation of OBBBA, the Company’s deferred tax assets for domestic research and development costs was partially accelerated resulting in a deduction of $266.7 million in the current fiscal year.
U.S. GAAP requires a two-step approach to     recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement.
As of June 29, 2025, the Company’s liability for unrecognized tax benefits was $8.3 million. During the fiscal year ended June 28, 2026, the liability for unrecognized tax benefits increased by $0.1 million, which was related to prior year tax positions. In addition, there was a decrease of $0.3 million for expiration of statute of limitations. As a result, the total liability for unrecognized tax benefits as of June 28, 2026 was $8.1 million. If any portion of this $8.1 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that $0.5 million of gross unrecognized tax benefits will change in the next 12 months as a result of statute requirements or settlement with tax authorities.
The following is a tabular reconciliation of the Company’s change in uncertain tax positions:
SuccessorPredecessor
(in millions of U.S. Dollars)Period from September 30, 2025 to June 28, 2026Period from June 30, 2025 to September 29, 2025Fiscal Year Ended June 29, 2025Fiscal Year Ended June 30, 2024
Balance at beginning of period$8.3 $8.3 $9.4 $9.8 
Increases related to prior year tax positions0.1 — — — 
Decreases related to prior year tax positions— — (1.1)(0.1)
Expiration of statute of limitations for assessment of taxes(0.3)— (0.4)(2.0)
Increases related to current year positions— — 0.4 1.7 
Balance at end of period$8.1 $8.3 $8.3 $9.4 
The Company's policy is to include interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line item in the consolidated statements of operations. Interest and penalties relating to unrecognized tax benefits recognized in the consolidated statements of operations was less than $0.1 million for the period from June 30, 2025 to September 29, 2025 and September 30, 2025 to June 28, 2026 and the fiscal years ended June 29, 2025, and June 30, 2024.
For Federal purposes, the Company is generally no longer subject to tax assessments for fiscal years prior to 2023. For state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2022. For foreign purposes, the Company is generally no longer subject to examination for tax periods prior to 2016. Certain carryforward tax attributes generated in prior years remain subject to examination, adjustment and recapture.
The Company provides for income taxes on the earnings of foreign subsidiaries unless such earnings are considered indefinitely reinvested outside the United States. As of June 28, 2026, the Company has approximately $32.1 million of undistributed earnings from certain non-U.S. subsidiaries, of which $6.8 million was not considered indefinitely reinvested. The Company would incur approximately $1.0 million of foreign income taxes upon repatriation of these earnings. The Company has not provided income taxes on the remaining $25.3 million of undistributed foreign earnings because it intends to reinvest these earnings indefinitely in foreign operations. If these earnings were subsequently repatriated to the United States, the Company would be required to pay approximately $2.6 million in taxes.