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Income Taxes | 12 Months Ended
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Jun. 24, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 14. Income Taxes Income/(loss) before provision for income taxes for fiscal 2023, 2022, and 2021 consisted of the following (in millions):
|  | 2023 |  |  | 2022 |  |  | 2021 |
United States |  | $ | (118.2 | ) |  | $ | (44.8 | ) |  | $ | (21.0 | )
Foreign |  |  | 244.2 |  |  |  | 365.3 |  |  |  | 141.1 |
Income before provision for income taxes |  | $ | 126.0 |  |  | $ | 320.5 |  |  | $ | 120.1 |
The provision for income taxes for fiscal 2023, 2022, and 2021 consisted of the following (in millions):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current tax expense/(benefit) |  |  |  |  |  |  |  |  |
Federal |  | $ | 15.8 |  |  | $ | (0.6 | ) |  | $ | 4.1 |
State |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |
Foreign |  |  | 62.4 |  |  |  | 94.9 |  |  |  | 36.1 |
|  |  | 78.3 |  |  |  | 94.3 |  |  |  | 40.3 |
Deferred tax expense/(benefit) |  |  |  |  |  |  |  |  |
Federal |  |  | (12.7 | ) |  |  | (21.8 | ) |  |  | (0.5 | )
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | (13.2 | ) |  |  | (7.9 | ) |  |  | (8.4 | )
|  |  | (25.9 | ) |  |  | (29.7 | ) |  |  | (8.9 | )
Provision for income taxes |  | $ | 52.4 |  |  | $ | 64.6 |  |  | $ | 31.4 |
The provision for income taxes differs from the federal statutory rate for fiscal 2023, 2022, and 2021 as follows (in millions):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Provision at U.S. federal statutory tax rate |  | $ | 26.4 |  |  | $ | 67.3 |  |  | $ | 25.1 |
State income taxes |  |  | — |  |  |  | — |  |  |  | 0.1 |
Non-deductible share-based compensation |  |  | 6.6 |  |  |  | 7.9 |  |  |  | 5.2 |
(Windfall)/shortfall related to share-based compensation |  |  | (1.3 | ) |  |  | (18.1 | ) |  |  | (3.8 | )
Non-deductible officer compensation |  |  | 6.4 |  |  |  | 6.4 |  |  |  | 6.4 |
Business credits |  |  | (5.2 | ) |  |  | (10.0 | ) |  |  | (3.8 | )
Foreign tax differential |  |  | (0.5 | ) |  |  | 6.4 |  |  |  | (6.7 | )
U.S. inclusion of foreign income |  |  | 21.0 |  |  |  | 3.6 |  |  |  | 5.2 |
Deferred taxes on unremitted foreign earnings |  |  | 0.3 |  |  |  | 0.7 |  |  |  | 3.5 |
Other differences |  |  | (1.3 | ) |  |  | 0.4 |  |  |  | 0.2 |
Provision for income taxes |  | $ | 52.4 |  |  | $ | 64.6 |  |  | $ | 31.4 |
Non-current deferred tax assets and non-current deferred tax liabilities are included in “Non-current other assets” and “Other long-term liabilities,” respectively, on our consolidated balance sheets. Significant components of our deferred tax assets (liabilities) as of the end of fiscal 2023 and 2022 consisted of the following (in millions):
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Capital loss carryforward |  | $ | 34.1 |  |  | $ | 33.8 |
Inventory write downs |  |  | 1.9 |  |  |  | 2.6 |
Property and equipment and intangible assets |  |  | 42.1 |  |  |  | 11.7 |
Share-based compensation |  |  | 10.3 |  |  |  | 12.0 |
Nondeductible interest |  |  | 4.9 |  |  |  | 5.4 |
Lease liabilities |  |  | 10.1 |  |  |  | 11.2 |
Business credit carryforward |  |  | 45.1 |  |  |  | 62.0 |
Net operating loss carryforward |  |  | 10.8 |  |  |  | 16.3 |
Other accruals |  |  | 5.1 |  |  |  | 5.6 |
|  |  | 164.4 |  |  |  | 160.6 |
Valuation allowance |  |  | (78.4 | ) |  |  | (75.0 | )
|  |  | 86.0 |  |  |  | 85.6 |
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  |  | (1.9 | ) |  |  | (2.0 | )
Right-of-use assets |  |  | (9.5 | ) |  |  | (11.5 | )
Unremitted foreign earnings |  |  | (14.3 | ) |  |  | (22.1 | )
Acquisition intangibles |  |  | (31.4 | ) |  |  | (45.8 | )
|  |  | (57.1 | ) |  |  | (81.4 | )
Net deferred tax assets |  | $ | 28.9 |  |  | $ | 4.2 |
The fiscal 2022 capital loss carryforward deferred tax asset and its corresponding valuation allowance includes a reclassification adjustment of $16.0 million to conform to the current period presentation. This reclassification had no impact on previously reported deferred tax assets. Realization of deferred tax assets depends on our generating sufficient U.S. and certain foreign taxable income in future years to obtain a benefit from the utilization of those deferred tax assets on our tax returns. Accordingly, the amount of deferred tax assets considered realizable may increase or decrease when we reevaluate the underlying basis for our estimates of future U.S. and foreign taxable income. As of the end of fiscal 2023, a valuation allowance of $78.4 million was maintained to reduce deferred tax assets primarily related to state tax credits and capital losses carryforwards that are not more likely than not to be realized through future taxable income. The net change in the valuation allowance during fiscal 2023 was an increase of $3.4 million, primarily due to an increase of unrealized deferred tax assets associated with state tax credits. We consider most of the earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes, that may result from a future repatriation of those earnings. As a result, $14.3 million of our deferred tax liability is associated with unremitted foreign earnings, which if remitted would not result in a further provision for income taxes. We continue to indefinitely reinvest $200 million on certain accumulated earnings and outside basis differences primarily related to our DSPG acquisition. If the undistributed earnings and other outside basis differences were recognized in a taxable transaction, the associated foreign tax credits would be expected to reduce the U.S. income tax liability associated with the foreign distribution or the otherwise taxable transaction. As of our fiscal 2023, assuming full utilization of the associated foreign tax credits, the potential net deferred tax liability associated with these undistributed earnings and outside basis differences would be approximately $46 million. As of the end of fiscal 2023, we had federal, California, and foreign net operating loss carryforwards of approximately $28.7 million, $25.0 million, and $49.6 million, respectively. The federal and California net operating loss will begin to expire in fiscal 2037 and 2027, respectively, if not utilized. Most of our foreign net operating losses have no expiration date. Under current tax law, net operating loss and tax credit carryforwards available to offset future income or income taxes may be limited by statute or upon the occurrence of certain events, including significant changes in ownership. We had $16.4 million and $53.4 million of federal and state research tax credit carryforwards, respectively, as of the end of fiscal 2023. The federal research tax credit carryforward will begin to expire in 2029 and the state research tax credit can be carried forward indefinitely. The total liability for gross unrecognized tax benefits related to uncertain tax positions, included in other liabilities in our consolidated balance sheets, increased by $13.9 million from $29.8 million in fiscal 2022 to $43.7 million in fiscal 2023. Of this amount, $33.1 million will reduce the effective tax rate on income from operations, if recognized. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits for fiscal 2023, 2022, and 2021 consisted of the following (in millions):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Beginning balance |  | $ | 29.8 |  |  | $ | 22.6 |  |  | $ | 20.1 |
Increase in unrecognized tax benefits related to current year tax positions |  |  | 13.7 |  |  |  | 7.1 |  |  |  | 5.5 |
Increase in unrecognized tax benefits related to prior year tax positions |  |  | 2.5 |  |  |  | 5.5 |  |  |  | — |
Decrease due to effective settlement with tax authorities |  |  | (1.1 | ) |  |  | — |  |  |  | — |
Remeasurement of unrecognized tax benefits |  |  | (0.3 | ) |  |  | (0.5 | ) |  |  | — |
Decrease due to statute expiration |  |  | (0.9 | ) |  |  | (4.9 | ) |  |  | (3.0 | )
Ending Balance |  | $ | 43.7 |  |  | $ | 29.8 |  |  | $ | 22.6 |
Accrued interest and penalties inc reased by $0.5 million in fiscal 2023 as compared to fiscal 2022 and increased by $0.8 million in fiscal 2022 as compared to fiscal 2021. Accrued interest and penalties were $3.0 million and $2.5 million as of the end of fiscal 2023and 2022, respectively. Our policy is to classify interest and penalties, if any, as components of income tax expense. It is reasonably possible that the amount of liability for unrecognized tax benefits may change within the next 12 months; an estimate of the range of possible changes could result in a decrease of $1.4 million to an increase of $8.8 million. Any prospective adjustments to our unrecognized tax benefits will be recorded as an increase or decrease to inc ome tax expense and cause a corresponding change to our effective tax rate. Accordingly, our effective tax rate could fluctuate materially from period to period. Our major tax jurisdictions are the U.S., Hong Kong SAR, Japan, Israel and the U.K. From fiscal 2017 onward, we remain subject to examination by one or more of these jurisdictions.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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