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Income Taxes
 12 Months Ended
Jun. 28, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14. Income Taxes
The Company’s income (loss) before income taxes consisted of the following (in millions):
Years Ended
June 28, 2025June 29, 2024July 1, 2023
Domestic$(88.8)$(95.8)$(37.6)
Foreign127.4 107.4 98.3 
Income before income taxes and equity investment earnings$38.6 $11.6 $60.7 
The Company’s income tax expense (benefit) consisted of the following (in millions):
Years Ended
June 28, 2025June 29, 2024July 1, 2023
Federal:
Current$— $0.3 $— 
Deferred(23.2)— — 
Total federal income tax (benefit) expense (23.2)0.3 — 
State:
Current(7.7)3.3 2.6 
Deferred(1.8)— — 
Total state income tax (benefit) expense (9.5)3.3 2.6 
Foreign:
Current41.0 32.8 27.6 
Deferred(3.9)1.0 5.0 
Total foreign income tax expense 37.1 33.8 32.6 
Total income tax expense$4.4 $37.4 $35.2 
The federal deferred benefit relates to the release of the valuation allowance related to the acquisition of Inertial Labs.
The state current benefit primarily relates to the release of state income tax reserves due to the lapse in the statute of limitations. The state deferred benefit relates to the release of the valuation allowance related to the acquisition of Inertial Labs.
The foreign current expense primarily relates to the Company’s profitable operations in certain foreign jurisdictions. The foreign deferred tax benefit primarily relates to the payment of withholding tax on intercompany dividends that were previously accrued as a deferred tax liability.
A reconciliation of the Company’s income tax expense at the federal statutory rate to the income tax expense at the effective tax rate is as follows (in millions):
Years Ended
June 28, 2025June 29, 2024July 1, 2023
Income tax expense computed at federal statutory rate$8.1 $2.4 $12.8 
Withholding taxes4.7 5.6 8.0 
U.S. inclusion of foreign earnings4.7 3.8 1.3 
Internal restructuring — 1.2 1.2 
Valuation allowance(14.4)17.5 0.5 
Foreign rate differential4.5 3.8 4.5 
Reserves(5.4)1.2 2.9 
Permanent items0.1 (0.6)1.1 
Fair value change of the earn-out liability(1.7)(2.0)(1.0)
Impact of prior years’ taxes0.5 3.0 (0.5)
Research and experimentation benefits and other tax credits(1.7)— (1.3)
State taxes1.6 — 2.6 
Disallowed compensations3.2 2.0 3.3 
Acquisition Costs0.5 — — 
Other(0.3)(0.5)(0.2)
Income tax expense$4.4 $37.4 $35.2 
The components of the Company’s net deferred taxes consisted of the following (in millions):
Balance as of
June 28, 2025June 29, 2024July 1, 2023
Gross deferred tax assets:
Tax credit carryforwards$140.5 $138.2 $136.4 
Net operating loss carryforwards337.9 381.0 437.5 
Capital loss carryforwards1.1 1.0 1.1 
Inventories48.9 37.2 40.2 
Accruals and reserves54.9 53.0 58.1 
Intangibles including acquisition related items 461.8 510.6 597.5 
Capitalized research costs355.6 312.3 186.7 
Other48.3 43.5 44.3 
Gross deferred tax assets1,449.0 1,476.8 1,501.8 
Valuation allowance(1,266.3)(1,336.0)(1,351.5)
Deferred tax assets182.7 140.8 150.3 
Gross deferred tax liabilities:
Acquisition related items(54.1)(29.4)(30.9)
Tax on unrepatriated earnings(4.9)(9.5)(13.7)
Foreign branch tax adjustments(25.2)(14.6)(15.0)
Other(17.4)(16.5)(17.7)
Deferred tax liabilities(101.6)(70.0)(77.3)
Total net deferred tax assets$81.1 $70.8 $73.0 
As of June 28, 2025, the Company had federal, state and foreign tax net operating loss carryforwards of $1,218.6 million, $314.9 million and $470.5 million, respectively, and federal and state research tax credit carryforwards of $84.6 million and $55.2 million, respectively. The federal tax net operating loss carryforwards start to expire in fiscal 2026 and at various dates through 2038, if not utilized. The federal research tax credit carryforwards start to expire in fiscal 2026, and at various dates through fiscal 2045, if not utilized. The state tax net operating loss carryforwards start to expire in fiscal 2026 and at various dates through 2045, if not utilized. The state research tax credit starts to expire in fiscal 2026 but a majority of the state credits have an indefinite carryforward period. In addition, a portion of the foreign tax net operating loss and capital loss carryforwards have an indefinite carryforward period. Utilization of the tax net operating losses may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state and foreign provisions. Loss carryforward limitations may result in the expiration or reduced utilization of a portion of the Company’s net operating losses.
During fiscal 2024, the Company completed a series of planned internal transactions between subsidiaries within the group to optimize our ability to repatriate earnings back to the U.S. As a result of these transactions, the Company is able to reduce the amount of withholding tax that will be accrued on current and future earnings. The tax expense of these transactions was approximately $1.2 million.
Foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries have not been provided on $19.2 million of undistributed earnings for certain foreign subsidiaries. The Company intends to reinvest these earnings indefinitely outside of the U.S. The Company estimates that an additional $1.9 million of foreign withholding taxes would have to be provided if these earnings were repatriated back to the U.S.
The valuation allowance decreased by $69.7 million in fiscal 2025, decreased by $15.5 million in fiscal 2024, and increased by $30.7 million in fiscal 2023. The decrease during fiscal 2025 was primarily due to the increase in the deferred tax liability that resulted from the acquisition of Inertial Labs and the expiration of federal net operating losses (NOLs) in the U.S. The decrease during fiscal 2024 was primarily due to the amortization of intangibles assets and utilization of NOLs, offset by an increase in the capitalization of federal research expenditures in the U.S. The increase during fiscal 2023 was primarily due to the increase in capitalization of federal research expenditures in the U.S. This includes the effects of the mandatory capitalization and amortization of R&D expenses incurred in fiscal 2023, as required by the 2017 Tax Cuts and Jobs Act (Tax Act).
The following table provides information about the activity of our deferred tax valuation allowance (in millions):
Deferred Tax Valuation AllowanceBalance at
Beginning
of Period
Additions Charged
to Expenses or
Other Accounts(1)
Deductions Credited to Expenses or Other Accounts(2)
Balance at
End of
Period
Year Ended June 28, 2025$1,336.0 $78.3 $(148.0)$1,266.3 
Year Ended June 29, 2024$1,351.5 $132.7 $(148.2)$1,336.0 
Year Ended July 1, 2023$1,320.8 $114.4 $(83.7)$1,351.5 
(1) Additions include current year additions charged to expenses and current year build due to increases in net deferred tax assets, return to provision true-ups, and other adjustments.
(2) Deductions include current year releases credited to expenses and current year reductions due to decreases in net deferred tax assets, return to provision true-ups, other adjustments and increases in deferred tax liabilities.
A reconciliation of unrecognized tax benefits between July 2, 2022 and June 28, 2025 is as follows (in millions):
Balance at July 2, 2022$53.4 
Additions based on tax positions related to current year2.7 
Additions based on tax positions related to prior year0.1 
Reductions based on tax positions related to prior year(1.1)
Reductions for lapse of statute of limitations(0.2)
Balance at July 1, 202354.9 
Additions based on tax positions related to current year1.2 
Additions based on tax positions related to prior year0.5 
Reductions based on tax positions related to prior year(1.9)
Reductions for lapse of statute of limitations(0.2)
Balance at June 29, 202454.5 
Additions based on tax positions related to current year2.2 
Additions based on tax positions related to prior year0.1 
Reductions based on tax positions related to prior year(4.1)
Reductions for lapse of statute of limitations(6.5)
Balance at June 28, 2025$46.2 
The unrecognized tax benefits relate primarily to the allocations of revenue and costs among the Company’s global operations and the validity of some U.S. tax credits. Included in the balance of unrecognized tax benefits at June 28, 2025 is $7.9 million of tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits at June 28, 2025 is $34.6 million of tax benefits that, if recognized, would result in adjustments to the valuation allowance.
The Company’s 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 28, 2025, June 29, 2024 and July 1, 2023 were approximately $3.4 million, $3.8 million, and $2.9 million, respectively. The timing and resolution of income tax examinations is uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued for each year. Although we do not expect that our balance of gross unrecognized tax benefits will change materially in the next 12 months, given the uncertainty in the development of ongoing income tax examinations, we are unable to estimate the full range of possible adjustments to this balance. 
The Company is routinely subject to various federal, state and foreign audits by taxing authorities. The Company believes that adequate amounts have been provided for any adjustments that may result from these examinations.
The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of June 28, 2025:
Tax JurisdictionsTax Years
United States(1)
2006 and onward
Canada2023 and onward
China2020 and onward
France2022 and onward
Germany2018 and onward
Korea2019 and onward
United Kingdom2023 and onward
(1) Although the Company is generally subject to a three-year statute of limitations in the U.S., tax authorities maintain the ability to adjust tax attribute carryforwards generated in earlier years.