XML 35 R22.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Income Taxes | 12 Months Ended
--- | ---
Jun. 26, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following were the components of loss before income taxes:
| Fiscal Years Ended
(in millions of U.S. Dollars) | June 26, 2022 |  | June 27, 2021 |  | June 28, 2020
Domestic | ($289.1) |  |  | ($348.7) |  |  | ($210.3) |
Foreign | 3.0 |  |  | 8.5 |  |  | 4.7 |
Loss before income taxes | ($286.1) |  |  | ($340.2) |  |  | ($205.6) |
The following were the components of income tax expense (benefit):
| Fiscal Years Ended
(in millions of U.S. Dollars) | June 26, 2022 |  | June 27, 2021 |  | June 28, 2020
Current: |  |  |  |  |
Federal | $0.3 |  |  | $0.1 |  |  | ($7.3) |
Foreign | 8.0 |  |  | 0.1 |  |  | 0.2 |
State | 0.1 |  |  | 0.2 |  |  | 0.1 |
Total current | 8.4 |  |  | 0.4 |  |  | (7.0) |
Deferred: |  |  |  |  |
Federal | 0.7 |  |  | 0.7 |  |  | 1.8 |
Foreign | (0.1) |  |  | — |  |  | (2.8) |
State | — |  |  | — |  |  | — |
Total deferred | 0.6 |  |  | 0.7 |  |  | (1.0) |
Income tax expense (benefit) | $9.0 |  |  | $1.1 |  |  | ($8.0) |
Actual income tax expense (benefit) differed from the amount computed by applying each period's U.S. federal statutory tax rate to pre-tax earnings as a result of the following:
| Fiscal Years Ended
(in millions of U.S. Dollars) | June 26, 2022 |  | % of Loss |  | June 27, 2021 |  | % of Loss |  | June 28, 2020 |  | % of Loss
Federal income tax provision at statutory rate | ($60.1) |  |  | 21 | % |  | ($71.4) |  |  | 21 | % |  | ($43.2) |  |  | 21 | %
(Decrease) increase in income tax expense resulting from: |  |  |  |  |  |  |  |  |  |  |
State tax provision, net of federal benefit | (2.5) |  |  | 1 | % |  | (1.9) |  |  | 1 | % |  | (1.9) |  |  | 1 | %
Tax exempt interest | (0.2) |  |  | — | % |  | (0.1) |  |  | — | % |  | (0.5) |  |  | — | %
(Decrease) increase in tax reserve | (0.2) |  |  | — | % |  | — |  |  | — | % |  | (0.3) |  |  | — | %
Research and development credits | (5.4) |  |  | 2 | % |  | (4.3) |  |  | 1 | % |  | (3.3) |  |  | 2 | %
Foreign tax credit | (0.3) |  |  | — | % |  | (0.4) |  |  | — | % |  | (0.3) |  |  | — | %
Increase (decrease) in valuation allowance | (51.6) |  |  | 18 | % |  | 75.0 |  |  | (22) | % |  | 50.3 |  |  | (25) | %
Extinguishment of convertible notes | (4.5) |  |  | 2 | % |  | — |  |  | — | % |  | (6.0) |  |  | 3 | %
Stock-based compensation | (3.3) |  |  | 1 | % |  | (2.8) |  |  | 1 | % |  | 2.1 |  |  | (1) | %
Statutory rate differences | — |  |  | — | % |  | 1.1 |  |  | — | % |  | 1.2 |  |  | (1) | %
Foreign earnings taxed in U.S. | 6.8 |  |  | (2) | % |  | 2.7 |  |  | (1) | % |  | 0.3 |  |  | — | %
Other foreign adjustments | — |  |  | — | % |  | (0.1) |  |  | — | % |  | 0.3 |  |  | — | %
Net operating loss carryback | — |  |  | — | % |  | — |  |  | — | % |  | (7.2) |  |  | 4 | %
Provision to return adjustments | 0.3 |  |  | — | % |  | (0.2) |  |  | — | % |  | (1.3) |  |  | 1 | %
Impact of rate changes | 0.5 |  |  | — | % |  | 2.7 |  |  | (1) | % |  | 0.8 |  |  | — | %
Expiration of state credits | 0.1 |  |  | — | % |  | 0.7 |  |  | — | % |  | 0.9 |  |  | — | %
Corporate restructuring adjustment | 129.1 |  |  | (45) | % |  | — |  |  | — | % |  | — |  |  | — | %
Other | 0.3 |  |  | — | % |  | 0.1 |  |  | — | % |  | 0.1 |  |  | — | %
Income tax expense (benefit) | $9.0 |  |  | (3) | % |  | $1.1 |  |  | — | % |  | ($8.0) |  |  | 4 | %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
(in millions of U.S. Dollars) | June 26, 2022 |  | June 27, 2021
Deferred tax assets: |  |  |
Compensation | $11.8 |  |  | $10.4 |
Inventories | 22.5 |  |  | 13.6 |
Sales return reserve and allowance for bad debts | 5.0 |  |  | 2.3 |
Federal and state net operating loss carryforwards | 321.0 |  |  | 360.6 |
Federal credits | 48.2 |  |  | 42.1 |
State credits | 1.2 |  |  | 1.2 |
48C investment tax credits | 35.7 |  |  | 36.6 |
Investments | 5.3 |  |  | 0.3 |
Stock-based compensation | 7.2 |  |  | 6.1 |
Deferred revenue | 18.9 |  |  | 26.3 |
Lease liabilities | 12.6 |  |  | 6.2 |
Other | 4.7 |  |  | 4.5 |
Total gross deferred assets | 494.1 |  |  | 510.2 |
Less valuation allowance | (339.2) |  |  | (414.4) |
Deferred tax assets, net | 154.9 |  |  | 95.8 |
Deferred tax liabilities: |  |  |
Property and equipment | (75.1) |  |  | (36.9) |
Intangible assets | (19.1) |  |  | (16.6) |
Investments | — |  |  | (1.1) |
Prepaid taxes and other | (0.6) |  |  | (0.7) |
Foreign earnings recapture | (4.3) |  |  | — |
Taxes on unremitted foreign earnings | (7.4) |  |  | (1.5) |
Lease assets | (12.6) |  |  | (6.1) |
Convertible notes | (38.0) |  |  | (34.4) |
Total gross deferred liability | (157.1) |  |  | (97.3) |
Deferred tax liability, net | ($2.2) |  |  | ($1.5) |
The components giving rise to the net deferred tax assets (liabilities) have been included in the consolidated balance sheets as follows:
| Balance at June 26, 2022
(in millions of U.S. Dollars) | Assets |  | Liabilities
U.S. federal income taxes | $— |  |  | ($3.2) |
Foreign income taxes | 1.0 |  |  | — |
Total | $1.0 |  |  | ($3.2) |
| Balance at June 27, 2021
(in millions of U.S. Dollars) | Assets |  | Liabilities
U.S. federal income taxes | $— |  |  | ($2.5) |
Foreign income taxes | 1.0 |  |  | — |
Total | $1.0 |  |  | ($2.5) |
The Company weighs all available evidence, both positive and negative, to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets by jurisdiction. The Company has concluded that it is necessary to recognize a full valuation allowance against its U.S. deferred tax assets as of June 26, 2022. As of June 27, 2021, the U.S. valuation allowance was $292.6 million. For the fiscal year ended June 26, 2022, the Company increased the U.S. valuation allowance by $46.6 million primarily due to an increase in deferred tax assets related to the current year domestic loss and tax credits generated offset by the current year increase in the domestic deferred tax liability on property and equipment, net. As of June 27, 2021, the Luxembourg valuation allowance was $121.8 million. As a result of the LED Business Divestiture and the liquidation of the Company’s common stock ownership interest in ENNOSTAR, the Company began reviewing its legal entity structure, including its Luxembourg holding company, during the fourth quarter of fiscal 2021. In the second quarter of fiscal 2022, the Company concluded its due diligence and commenced a plan to restructure its Luxembourg holding company, resulting in the recognition of $7.3 million of income tax expense. The $7.3 million of income tax expense represents the net effect of $129.1 million of income tax expense generated from taxable income as a result of the restructuring plan offset by a full release of the valuation allowance against the Company’s Luxembourg net operating loss deferred tax assets, which totaled $121.8 million. As of June 26, 2022, the Company does not have a valuation allowance against Luxembourg deferred tax assets. As of June 26, 2022, the Company had approximately $2.4 million of foreign net operating loss carryovers, of which less than $0.1 million are offset by a valuation allowance. Of the Company's foreign net operating loss carryovers, $2.4 million have no carry forward limitation. As of June 26, 2022, the Company had approximately $1.5 billion of federal net operating loss carryovers and $313.4 million of state net operating loss carryovers which are fully offset by a valuation allowance. Additionally, the Company had $83.9 million of federal and $1.2 million of state income tax credit carryforwards which are fully offset by a valuation allowance. The federal and state net operating loss carryovers will begin to expire in fiscal 2038 and fiscal 2023, respectively. The federal and state income tax credit carryforwards will begin to expire in fiscal 2031 and fiscal 2023, respectively. U.S. GAAP requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement. As of June 27, 2021, the Company’s liability for unrecognized tax benefits was $7.4 million. During the fiscal year ended June 26, 2022, the Company recognized a $0.2 million decrease to the liability for unrecognized tax benefits due to statute expiration. As a result, the total liability for unrecognized tax benefits as of June 26, 2022 was $7.2 million. If any portion of this $7.2 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that $0.4 million of gross unrecognized tax benefits will change in the next 12 months as a result of statute requirements or settlement with tax authorities. The following is a tabular reconciliation of the Company’s change in uncertain tax positions:
| Fiscal Years Ended
(in millions of U.S. Dollars) | June 26, 2022 |  | June 27, 2021 |  | June 28, 2020
Balance at beginning of period | $7.4 |  |  | $7.4 |  |  | $8.2 |
Decrease related to current year change in law | — |  |  | — |  |  | — |
Increases related to prior year tax positions | — |  |  | — |  |  | — |
Decreases related to prior year tax positions | — |  |  | — |  |  | — |
Settlements with tax authorities | — |  |  | — |  |  | (0.1) |
Expiration of statute of limitations for assessment of taxes | (0.2) |  |  | — |  |  | (0.7) |
Balance at end of period | $7.2 |  |  | $7.4 |  |  | $7.4 |
The Company's policy is to include interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line item in the consolidated statements of operations. Interest and penalties relating to unrecognized tax benefits recognized in the consolidated statements of operations totaled less than $0.1 million for the fiscal years ended June 26, 2022, June 27, 2021, and June 28, 2020. The Company accrued less than $0.1 million for interest and penalties relating to unrecognized tax benefits in the consolidated balance sheets as of June 26, 2022 and June 27, 2021. The Company files U.S. federal, U.S. state and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2017. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2018. For foreign purposes, the Company is generally no longer subject to examination for tax periods prior to 2012. Certain carryforward tax attributes generated in prior years remain subject to examination, adjustment and recapture. The Company provides for income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside the United States. As of June 26, 2022, the Company has approximately $206.3 million of undistributed earnings for certain non-U.S. subsidiaries. The Company has determined that $190.3 million of the $206.3 million of undistributed foreign earnings are expected to be repatriated in the foreseeable future. The Company expects to incur $7.4 million of foreign income taxes upon repatriation of the $190.3 million foreign earnings. As of June 26, 2022, the Company has not provided income taxes on the remaining undistributed foreign earnings of $16.0 million as the Company continues to maintain its intention to reinvest these earnings in foreign operations indefinitely. If, at a later date, these earnings were repatriated to the United States, the Company would be required to pay approximately $0.3 million in taxes on these amounts.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration