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v3.25.2

Income Taxes | 12 Months Ended
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May 03, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11. Income Taxes Income tax provision The U.S. and foreign components of pre-tax (loss) income and income tax expense (benefit) are as follows:
|  | Fiscal Year Ended |
|  | May 3, 2025 |  |  | April 27, 2024 |  |  | April 29, 2023 |
(in millions) |  | (53 Weeks) |  |  | (52 Weeks) |  |  | (52 Weeks) |
Pre-tax (loss) income: |  |  |  |  |  |  |  |  |
U.S. |  | $ | (118.3 | ) |  | $ | (199.4 | ) |  | $ | (3.6 | )
Foreign |  |  | 68.2 |  |  |  | 71.3 |  |  |  | 93.7 |
Total pre-tax (loss) income |  | $ | (50.1 | ) |  | $ | (128.1 | ) |  | $ | 90.1 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |
U.S. (federal and state) |  | $ | (4.0 | ) |  | $ | 0.1 |  |  | $ | 0.1 |
Foreign |  |  | 22.0 |  |  |  | 16.6 |  |  |  | 16.9 |
Total current expense |  |  | 18.0 |  |  |  | 16.7 |  |  |  | 17.0 |
Deferred: |  |  |  |  |  |  |  |  |
U.S. (federal and state) |  |  | (0.9 | ) |  |  | (17.9 | ) |  |  | (5.7 | )
Foreign |  |  | (4.6 | ) |  |  | (3.6 | ) |  |  | 1.7 |
Total deferred benefit |  |  | (5.5 | ) |  |  | (21.5 | ) |  |  | (4.0 | )
Total income tax expense (benefit) |  | $ | 12.5 |  |  | $ | (4.8 | ) |  | $ | 13.0 |
A reconciliation of income tax expense (benefit) to the U.S. statutory federal income tax rate of 21% is as follows:
|  | Fiscal Year Ended |
|  | May 3, 2025 |  |  | April 27, 2024 |  |  | April 29, 2023 |
(in millions) |  | (53 Weeks) |  |  | (52 Weeks) |  |  | (52 Weeks) |
Income tax at statutory rate |  | $ | (10.5 | ) |  | $ | (26.9 | ) |  | $ | 18.9 |
Effect of: |  |  |  |  |  |  |  |  |
State income taxes, net of federal benefit |  |  | (2.0 | ) |  |  | (1.0 | ) |  |  | — |
Reorganization of a foreign owned subsidiary |  |  | — |  |  |  | — |  |  |  | (7.3 | )
Goodwill impairment |  |  | — |  |  |  | 22.7 |  |  |  | — |
Interest |  |  | 2.3 |  |  |  | — |  |  |  | 0.2 |
Withholding taxes |  |  | 2.0 |  |  |  | 3.2 |  |  |  | 3.4 |
Non-deductible compensation |  |  | 3.7 |  |  |  | 0.3 |  |  |  | 1.6 |
Foreign tax differential |  |  | (2.6 | ) |  |  | (5.1 | ) |  |  | (11.6 | )
U.S. tax on foreign income |  |  | 11.5 |  |  |  | 3.5 |  |  |  | 2.9 |
Foreign investment tax credit |  |  | — |  |  |  | 0.1 |  |  |  | 5.0 |
Research and development |  |  | (1.4 | ) |  |  | (1.5 | ) |  |  | (1.5 | )
Change in tax reserve |  |  | (4.0 | ) |  |  | — |  |  |  | (0.6 | )
Change in valuation allowance |  |  | 13.5 |  |  |  | (1.0 | ) |  |  | — |
Tax rate change, foreign |  |  | — |  |  |  | — |  |  |  | 0.2 |
Other, net |  |  | — |  |  |  | 0.9 |  |  |  | 1.8 |
Income tax expense (benefit) |  | $ | 12.5 |  |  | $ | (4.8 | ) |  | $ | 13.0 |
Effective income tax rate |  |  | (25.0 | )% |  |  | 3.7 | % |  |  | 14.4 | %
The effective tax rate for fiscal 2025 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets of $13.5 million and an unfavorable impact of U.S. tax on foreign income of $11.5 million primarily from global intangible low-tax income (“GILTI”), partially offset by a favorable decrease in tax reserves of $4.0 million. The valuation allowance was recorded as the Company determined that based on the evaluation of all available evidence that the recovery of some of its deferred tax assets was not more likely than not. The Organization for Economic Cooperation and Development’s (“OECD”) Pillar II Initiative introduced a 15% global minimum tax for certain multinational groups exceeding minimum annual global revenue thresholds. Some countries in which the Company operates have enacted legislation adopting the minimum tax effective January 1, 2024. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. For fiscal 2025, the Company performed a calculation of an additional top-up tax under the safe harbor Pillar 2 Framework to determine the jurisdictions where the effective tax rate fell below the minimum threshold of 15%. This amount was not significant to the fiscal 2025 income tax provision for the Company. In fiscal 2024, the effective income tax rate was favorably impacted by pre-tax losses in operations, the amount of income earned in foreign jurisdictions with lower tax rates of $5.1 million and research and development expenditures of $1.5 million. These are offset by non-deductible goodwill impairment of $22.7 million, withholding taxes of $3.2 million, and U.S. tax on foreign income of $3.5 million of which GILTI is the main component. In fiscal 2023, the effective income tax rate was favorably impacted by the amount of income earned in foreign jurisdictions with lower tax rates. In addition, the Company received a benefit of approximately $7.3 million related to the reorganization of a foreign owned subsidiary. These benefits were partially offset by a reduction in foreign investment tax credits of $5.0 million and non-deductible acquisition costs of $1.4 million. Deferred income taxes and valuation allowances Significant components of the Company’s deferred income tax assets and liabilities were as follows:
(in millions) |  | May 3, 2025 |  |  | April 27, 2024 |
Deferred tax liabilities: |  |  |  |  |  |
Amortization |  | $ | (51.9 | ) |  | $ | (56.5 | )
Foreign tax |  |  | (2.9 | ) |  |  | (3.2 | )
Lease assets |  |  | (5.7 | ) |  |  | (5.8 | )
Derivative financial instruments |  |  | — |  |  |  | (0.2 | )
Unrealized foreign exchange gain/loss |  |  | (1.9 | ) |  |  | (0.5 | )
Deferred tax liabilities, gross |  |  | (62.4 | ) |  |  | (66.2 | )
Deferred tax assets: |  |  |  |  |  |
Deferred compensation and stock award amortization |  |  | 6.9 |  |  |  | 9.0 |
Fixed assets |  |  | 1.6 |  |  |  | 1.3 |
Inventory |  |  | 8.6 |  |  |  | 5.9 |
Lease liabilities |  |  | 6.4 |  |  |  | 5.9 |
Derivative financial instruments |  |  | 0.9 |  |  |  | — |
Foreign investment tax credit |  |  | 25.6 |  |  |  | 24.4 |
Research expenditures |  |  | 8.3 |  |  |  | 6.3 |
Net operating loss carryforwards |  |  | 14.8 |  |  |  | 13.2 |
Foreign tax credits |  |  | 3.4 |  |  |  | 1.7 |
Interest carryforwards |  |  | 12.3 |  |  |  | 7.9 |
Other |  |  | 5.3 |  |  |  | 2.4 |
Deferred tax assets, gross |  |  | 94.1 |  |  |  | 78.0 |
Less valuation allowance |  |  | (20.7 | ) |  |  | (5.8 | )
Deferred tax assets, net of valuation allowance |  |  | 73.4 |  |  |  | 72.2 |
Net deferred tax asset |  | $ | 11.0 |  |  | $ | 6.0 |
Balance sheet classification: |  |  |  |  |  |
Long-term asset |  | $ | 37.8 |  |  | $ | 34.7 |
Long-term liability |  |  | (26.8 | ) |  |  | (28.7 | )
Net deferred tax asset |  | $ | 11.0 |  |  | $ | 6.0 |
The Company recorded a net deferred tax asset for U.S. and foreign income taxes of $11.0 million and $6.0 million as of May 3, 2025 and April 27, 2024, respectively. In assessing the realizability of the deferred tax assets, the Company considers whether it is more likely than not that some portion or the entire deferred tax asset will be realized. Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient earnings in future periods in which these temporary items can be utilized. In that regard, the Company recorded a valuation allowance of $20.7 million related to federal, state, and foreign net operating loss carryovers and other credits as it determined that these deferred tax assets are not more likely than not to be realized. As of May 3, 2025, the Company had available $31.6 million of federal, $98.0 million of state and $0.6 million of foreign gross operating loss carryforwards with a valuation allowance of $25.9 million for federal, $90.0 million for state and $0.0 million for foreign. The U.S. federal net operating loss carryforwards will substantially start to expire in 2028 and beyond. The state net operating loss carryforwards will substantially start to expire in 2036 and beyond. Total unused credits are $29.2 million as of May 3, 2025, the majority of which can be carried forward indefinitely. Indefinite reinvestment The Company has not provided for deferred income taxes on the undistributed earnings of foreign subsidiaries except for certain identified amounts. The amount the Company expects to repatriate is based on a variety of factors including current year earnings of the foreign subsidiaries, foreign investment needs, and U.S. cash flow considerations. The Company considers the remaining undistributed foreign earnings that are not specifically identified of approximately $332.1 million to be indefinitely reinvested. It is not practicable to determine the amount of deferred tax liability on such foreign earnings as the actual tax liability is dependent on circumstances that exist when the remittance occurs. Unrecognized tax benefits The Company operates in multiple jurisdictions throughout the world and the income tax returns of its subsidiaries in various jurisdictions are subject to periodic examination by the tax authorities. The Company regularly assesses the status of these examinations and the various outcomes to determine the adequacy of its provision for income taxes. The amount of gross unrecognized tax benefits totaled $0.8 million and $4.4 million as of May 3, 2025 and April 27, 2024, respectively. The amount for May 3, 2025, of unrecognized benefits that, if recognized, would favorably impact the effective tax rate if resolved in the Company’s favor is $0.6 million. The Company recognizes interest and penalties related to income tax uncertainties in income tax expense. Accrued interest and penalties were $0.1 million and $0.4 million at May 3, 2025 and April 27, 2024, respectively. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
(in millions) |  | May 3, 2025 |  |  | April 27, 2024 |
Balance at beginning of period |  | $ | 4.4 |  |  | $ | 4.5 |
Increases for positions related to the current year |  |  | 0.3 |  |  |  | 0.2 |
Lapsing of statutes of limitations |  |  | (3.9 | ) |  |  | (0.3 | )
Balance at end of period |  | $ | 0.8 |  |  | $ | 4.4 |
At May 3, 2025, the expected change to the total amount of unrecognized tax benefits in the next twelve months is approximately $0.2 million due to potential expiration of statute of limitations. The U.S. federal statute of limitations remains open for fiscal years ended on or after 2022 and for state tax purposes on or after fiscal year 2021. Tax authorities may have the ability to review and adjust net operating losses or tax credits that were generated prior to these fiscal years. In the major foreign jurisdictions, fiscal 2021 and subsequent periods remain open and subject to examination by taxing authorities.

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