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v3.22.2.2

Income Taxes | 12 Months Ended
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Jul. 01, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes and income tax provision (benefit) were as follows:
| Fiscal Years
| 2022 |  | 2021 |  | 2020
Income (loss) before income taxes: |  |  |  |  |
United States | $ | 24,286 |  |  | $ | 85,101 |  |  | $ | 93,388 |
Foreign | (5,891) |  |  | (7,928) |  |  | 545 |
| $ | 18,395 |  |  | $ | 77,173 |  |  | $ | 93,933 |
Tax provision (benefit): |  |  |  |  |
Federal: |  |  |  |  |
Current | $ | 3,857 |  |  | $ | 12,157 |  |  | $ | 8,442 |
Deferred | (230) |  |  | (995) |  |  | (1,077) |
| 3,627 |  |  | 11,162 |  |  | 7,365 |
State: |  |  |  |  |
Current | 3,626 |  |  | 6,271 |  |  | 3,407 |
Deferred | (2,721) |  |  | (2,689) |  |  | (2,327) |
| 905 |  |  | 3,582 |  |  | 1,080 |
Foreign: |  |  |  |  |
Current | 2,535 |  |  | 435 |  |  | 475 |
Deferred | 53 |  |  | (50) |  |  | (699) |
| 2,588 |  |  | 385 |  |  | (224) |
| $ | 7,120 |  |  | $ | 15,129 |  |  | $ | 8,221 |
The following is the reconciliation between the statutory Federal income tax rate and the Company’s effective income tax rate:
| Fiscal Years
| 2022 |  | 2021 |  | 2020
Tax provision at federal statutory rates | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income tax, net of federal tax benefit | 8.1 |  |  | 6.7 |  |  | 6.1 |
Research and development tax credits | (39.5) |  |  | (10.9) |  |  | (11.9) |
Provision to return | 10.3 |  |  | (1.3) |  |  | (3.1) |
Excess tax provision (benefit) related to stock compensation | 5.3 |  |  | (3.7) |  |  | (7.7) |
Foreign income tax rate differential | 2.3 |  |  | 0.9 |  |  | 0.1 |
Non-deductible compensation | 20.9 |  |  | 3.6 |  |  | 2.6 |
Acquisition costs | 1.2 |  |  | 0.4 |  |  | — |
Reserves for unrecognized income tax benefits | 5.4 |  |  | 1.3 |  |  | 3.0 |
Tax rate changes | — |  |  | — |  |  | (0.5) |
Valuation allowance | 4.3 |  |  | 1.9 |  |  | — |
Other | (0.6) |  |  | (0.3) |  |  | (0.8) |
| 38.7 | % |  | 19.6 | % |  | 8.8 | %
The effective tax rate for fiscal 2022 differed from the Federal statutory rate primarily due to additional tax provisions for non-deductible compensation, provision to return adjustments, state taxes and excess tax provisions related to stock compensation, partially offset by benefits related to research and development tax credits. The effective tax rate for fiscal 2021 differed from the Federal statutory rate primarily due to benefits related to research and development tax credits and excess tax benefits related to stock compensation, partially offset by additional tax provisions related to state taxes and non-deductible compensation. During fiscal 2022, 2021 and 2020 the Company recognized a tax provision (benefit) of $977, $(2,831) and $(7,259) related to stock compensation, respectively. In fiscal 2022, the Company recorded a provision to return adjustment of $2,308 related to an immaterial correction of an error over transfer pricing allocations. The Company concluded that the impact of the correction was neither quantitatively nor qualitatively material to its Consolidated Balance Sheets or Statement of Operations and Comprehensive Income for fiscal 2022, nor to the impacted prior periods. The components of the Company’s net deferred tax liabilities were as follows:
| As of
| July 1, 2022 |  | July 2, 2021
Deferred tax assets: |  |  |
Inventory valuation and receivable allowances | 17,248 |  |  | 15,039 |
Accrued compensation | 5,970 |  |  | 5,421 |
Stock compensation | 6,154 |  |  | 4,548 |
Federal and state tax credit carryforwards | 20,294 |  |  | 17,405 |
Other accruals | 1,503 |  |  | 994 |
Deferred compensation | 930 |  |  | 930 |
Acquired net operating loss carryforward | 5,275 |  |  | 10,487 |
Foreign net operating loss carryforward | 1,859 |  |  | 1,703 |
Operating lease liabilities | 21,988 |  |  | 21,889 |
Deferred revenue | 743 |  |  | 2,899 |
Other | 307 |  |  | 734 |
| 82,271 |  |  | 82,049 |
Valuation allowance | (15,349) |  |  | (15,257) |
Total deferred tax assets | 66,922 |  |  | 66,792 |
Deferred tax liabilities: |  |  |
Prepaid expenses | (1,815) |  |  | (984) |
Property and equipment | (19,766) |  |  | (17,734) |
Intangible assets | (59,628) |  |  | (58,839) |
Operating lease right-of-use assets | (17,985) |  |  | (17,987) |
Other | (126) |  |  | (58) |
Total deferred tax liabilities | (99,320) |  |  | (95,602) |
Net deferred tax liabilities | $ | (32,398) |  |  | $ | (28,810) |
As reported: |  |  |
Deferred tax liabilities | $ | (32,398) |  |  | $ | (28,810) |
| $ | (32,398) |  |  | $ | (28,810) |
At July 1, 2022, the Company evaluated the need for a valuation allowance on deferred tax assets. In assessing whether the deferred tax assets are realizable, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's past and recent operating performance and results, future taxable income including the reversal of existing deferred tax liabilities and tax planning strategies. The Company continues to conclude that its net deferred tax assets in Switzerland are not more likely than not to be realized, and as such, continues to maintain a valuation allowance on such net deferred tax assets. The Company also continues to conclude that certain state research and development tax credits carryforwards are not more likely than not to be realized, and as such, continues to maintain a valuation allowance on these carryforwards. The Company continues to conclude that all other deferred tax assets are more likely than not to be realized. Any future changes in the valuation allowance will impact the Company's income tax provision. The Company has state research and development tax credit carryforwards of $18,771, which will expire starting in fiscal year 2022 through fiscal year 2037. The Company has acquired Federal net operating loss carryforwards of $6,453, which have an unlimited carryforward period. The Company has acquired state net operating loss carryforwards of $61,379, which will expire in fiscal year 2040. The Company has foreign net operating loss carryforwards of $12,723, which will expire starting in fiscal year 2028 through fiscal year 2042. The Company maintains a valuation allowance on the majority of the foreign net operating loss carryforward. The Company is subject to taxation in the U.S. (Federal and state) and various foreign jurisdictions that it operates in. The Company has established income tax reserves for potential additional income taxes based upon management’s assessment, including recognition and measurement. All income tax reserves are analyzed quarterly and adjustments are made as events occur and warrant modification. The changes in the Company’s income tax reserves for gross unrecognized income tax benefits, including interest and penalties, are summarized as follows:
| Fiscal Years
| 2022 |  | 2021
Unrecognized tax benefits, beginning of period | $ | 7,467 |  |  | $ | 4,117 |
Increases for tax positions taken related to a prior period | 160 |  |  | 113 |
Increases for tax positions taken during the current period | 990 |  |  | 917 |
Increases for tax positions taken by an acquired company | 615 |  |  | 2,348 |
Decreases for tax positions taken related to a prior period | — |  |  | (27) |
Decreases for tax positions taken during current period | — |  |  | — |
Decreases for settlements of previously recognized positions | (92) |  |  | — |
Decreases as a result of a lapse of the applicable statute of limitations | (28) |  |  | (1) |
Unrecognized tax benefits, end of period | $ | 9,112 |  |  | $ | 7,467 |
The Company is currently under audit by the Internal Revenue Service for fiscal years 2016 through 2018. It is reasonably possible that within the next 12 months the Company’s unrecognized tax benefits, exclusive of interest, may decrease by up to $2,061 at the conclusion of the audit. The $9,112 of unrecognized tax benefits as of July 1, 2022, if released, would reduce income tax provision. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. The total amount of gross interest and penalties accrued was $488 and $315 as of July 1, 2022 and July 2, 2021, respectively, and the amount of interest and penalties recognized in fiscal 2022, 2021 and 2020 was $172, $139 and $91, respectively. The Company’s major tax jurisdiction is the U.S. (Federal and state) and the open tax years are fiscal 2016 through 2022.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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