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Income Taxes
 12 Months Ended
Jun. 29, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 6. INCOME TAXES

Income tax expense is summarized as following (in thousands):

 

 

 

Years Ended

 

 

 

June 29, 2025

 

 

June 30, 2024

 

Current:

 

 

 

 

 

 

Federal

 

$

4,726

 

 

$

4,466

 

State

 

 

336

 

 

 

619

 

Foreign

 

 

2,545

 

 

 

3,401

 

 

 

 

7,607

 

 

 

8,486

 

Deferred:

 

 

 

 

 

 

Federal

 

 

(1,103

)

 

 

(3,988

)

State

 

 

(138

)

 

 

(538

)

Foreign

 

 

(649

)

 

 

(185

)

 

 

 

(1,890

)

 

 

(4,711

)

Total income tax expense

 

$

5,717

 

 

$

3,775

 

Income tax expense recognized in the accompanying consolidated statements of income differs from the amounts computed by applying the federal income tax rate to earnings before income tax expense. A reconciliation at the federal statutory rate to the effective tax rate is summarized in the following table:

 

 

 

Years Ended

 

 

 

June 29, 2025

 

 

June 30, 2024

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

State taxes, net of federal tax benefit

 

 

1.0

 

 

 

2.7

 

Foreign subsidiaries

 

 

(1.7

)

 

 

5.4

 

China non-resident capital gain tax

 

 

—

 

 

 

(1.6

)

Valuation allowance

 

 

4.9

 

 

 

2.6

 

Return to provision adjustment

 

 

1.1

 

 

 

(6.1

)

Research and development tax credit

 

 

(6.0

)

 

 

(8.1

)

Non-controlling interest

 

 

0.4

 

 

 

2.3

 

Stock-based compensation

 

 

(0.1

)

 

 

0.7

 

Other

 

 

2.6

 

 

 

(0.2

)

Effective income tax rate

 

 

23.2

%

 

 

18.7

%

The components of deferred tax (liabilities) assets were as follows (in thousands):

 

 

June 29, 2025

 

 

June 30, 2024

 

Deferred tax assets:

 

 

 

 

 

 

Research and development costs

 

$

10,396

 

 

$

8,598

 

Compensation and employee benefits

 

 

6,472

 

 

 

5,894

 

Other accrued expenses

 

 

4,871

 

 

 

4,672

 

Capital loss and credit carryforwards

 

 

4,923

 

 

 

3,576

 

Lease liabilities

 

 

739

 

 

 

931

 

Other

 

 

1,296

 

 

 

1,714

 

Gross deferred tax assets

 

 

28,697

 

 

 

25,385

 

Valuation allowance

 

 

(3,865

)

 

 

(2,569

)

Net deferred tax assets

 

 

24,832

 

 

 

22,816

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant and equipment

 

 

(3,167

)

 

 

(3,455

)

Lease right of use assets

 

 

(662

)

 

 

(856

)

Other

 

 

(1,472

)

 

 

(912

)

Gross deferred tax liabilities

 

 

(5,301

)

 

 

(5,223

)

Net deferred tax assets

 

$

19,531

 

 

$

17,593

 

The Company has foreign tax credit carryforwards of $2.5 million (expiring between 2031 and 2044), $647,000 of state tax credit carryforward (expiring between 2026 and 2039) and $1.8 million of net capital loss carryforward. The Company has established a full valuation allowance against the capital loss carryforward and a partial valuation allowance against deferred tax assets associated with other credit carryforward and deductions, based on its assessment of future realization.

The total liability for unrecognized tax benefits was $1.9 million as of June 29, 2025 and $1.6 million as of June 30, 2024 and was included in Other noncurrent liabilities in the accompanying consolidated balance sheets. Substantially all of these unrecognized tax benefits, if recognized, would impact the effective income tax rate. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense.

 

Income tax returns are filed in the United States, Wisconsin, Michigan and various other states, as well as Mexico and other foreign jurisdictions. Tax years open to examination by tax authorities under the statute of limitations include fiscal 2022 through 2025 for federal, fiscal 2021 through 2025 for most states and calendar 2020 through 2024 for foreign jurisdictions.

 

On July 4, 2025, the One Big Beautiful Bill Act (the Act) was signed into law. Key provisions that may impact the Company include the ability to immediately expense qualifying research and development costs and permanent extensions of certain provisions within the 2017 Tax Cuts and Jobs Act. The Company is currently evaluating the future impact of the Act on its financial position, results of operations and cash flows.