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Income Taxes
 12 Months Ended
Jul. 02, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes and income tax expense were as follows:
 Fiscal Years
 202120202019
Income (loss) before income taxes:
United States$85,101 $93,388 $57,281 
Foreign(7,928)545 2,246 
$77,173 $93,933 $59,527 
Tax provision (benefit):
Federal:
Current$12,157 $8,442 $11,454 
Deferred(995)(1,077)(3,008)
11,162 7,365 8,446 
State:
Current6,271 3,407 5,194 
Deferred(2,689)(2,327)(1,421)
3,582 1,080 3,773 
Foreign:
Current435 475 546 
Deferred(50)(699)(13)
385 (224)533 
$15,129 $8,221 $12,752 
The following is the reconciliation between the statutory Federal income tax rate and the Company’s effective income tax rate:
 Fiscal Years
 202120202019
Tax provision at federal statutory rates21.0 %21.0 %21.0 %
State income tax, net of federal tax benefit6.7 6.1 5.9 
Research and development tax credits(10.9)(11.9)(4.5)
Provision to return(1.3)(3.1)— 
Excess tax benefits related to stock compensation(3.7)(7.7)(4.5)
Foreign income tax rate differential0.9 0.1 0.1 
Non-deductible compensation3.6 2.6 2.0 
Acquisition costs0.4 — 0.1 
Reserves for unrecognized income tax benefits1.3 3.0 0.3 
Tax rate changes— (0.5)— 
Valuation allowance1.9 — — 
Other(0.3)(0.8)1.0 
19.6 %8.8 %21.4 %
The effective tax rate for fiscal 2021 and 2020 differed from the Federal statutory rate primarily due to benefits related to research and development tax credits and excess tax benefits related to stock compensation, partially offset by additional tax expense related to state taxes and non-deductible compensation. During fiscal 2021, 2020 and 2019 the Company recognized a tax benefit of $2,831, $7,259 and $2,672 related to excess tax benefits on stock compensation, respectively.
The components of the Company’s net deferred tax liabilities were as follows:
 As of
 July 2, 2021July 3, 2020
Deferred tax assets:
Inventory valuation and receivable allowances15,039 12,066 
Accrued compensation5,421 5,941 
Stock compensation4,548 5,062 
Federal and state tax credit carryforwards17,405 11,782 
Other accruals994 1,086 
Deferred compensation930 930 
Acquired net operating loss carryforward

10,487 425 
Foreign net operating loss carryforward1,703 453 
Operating lease liabilities21,889 20,035 
Deferred revenue2,899 781 
Other734 642 
82,049 59,203 
Valuation allowance(15,257)(11,264)
Total deferred tax assets66,792 47,939 
Deferred tax liabilities:
Prepaid expenses(984)(1,111)
Property and equipment(17,734)(10,668)
Intangible assets(58,839)(33,007)
Operating lease right-of-use assets(17,987)(16,426)
Other(58)(616)
Total deferred tax liabilities(95,602)(61,828)
Net deferred tax liabilities$(28,810)$(13,889)
As reported:
Deferred tax liabilities$(28,810)$(13,889)
$(28,810)$(13,889)
At July 2, 2021, the Company evaluated the need for a valuation allowance on deferred tax assets. In assessing whether the deferred tax assets are realizable, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's past and recent operating performance and results, future taxable income including the reversal of existing deferred tax liabilities, and tax planning strategies. In fiscal year 2021, the Company recorded a valuation allowance on the net deferred tax assets of the Company’s subsidiary in Switzerland. The Company continues to conclude that certain state research and development tax credits carryforwards are not more likely than not to be realized, and as such, continues to maintain a valuation allowance on these carryforwards. The Company continues to conclude that all other deferred tax assets are more likely than not to be realized. Any future changes in the valuation allowance will impact income tax expense.
The Company has state research and development tax credit carryforwards of $18,926, which will expire starting in fiscal year 2021 through fiscal year 2034.
The Company is subject to taxation in the U.S. (Federal and state) and various foreign jurisdictions that it operates in. The Company has established reserves to provide for additional income taxes that management believes will more likely than not be due in future years as these previously filed tax returns are audited. These reserves have been established based upon management’s assessment as to the potential exposures. All tax reserves are analyzed quarterly and adjustments are made as events occur and warrant modification.
The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:
 Fiscal Years
 20212020
Unrecognized tax benefits, beginning of period$4,117 $1,273 
Increases for tax positions taken related to a prior period113 2,146 
Increases for tax positions taken during the current period917 854 
Increases for tax positions taken by an acquired company2,348 — 
Decreases for tax positions taken related to a prior period(27)— 
Decreases for tax positions taken during current period— — 
Decreases for settlements of previously recognized positions— — 
Decreases as a result of a lapse of the applicable statute of limitations(1)(156)
Unrecognized tax benefits, end of period$7,467 $4,117 
The Company is currently under audit by the Internal Revenue Service for fiscal years 2016-2018. It is reasonably possible that within the next 12 months the Company’s unrecognized tax benefits, exclusive of interest, may decrease by up to $2,061 at the conclusion of the audit. We expect that the decrease, if recognized, would not affect the effective tax rate.
The $7,467 of unrecognized tax benefits as of July 2, 2021, if released, would reduce income tax expense. The Company increased its unrecognized income tax benefits primarily due to a tax position previously taken on a tax return of an acquired company.
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. The total amount of gross interest and penalties accrued was $315 and $175 as of July 2, 2021 and July 3, 2020, respectively, and the amount of interest and penalties recognized in fiscal 2021, 2020 and 2019 was $139, $91 and $101, respectively.
The Company’s major tax jurisdiction is the U.S. (Federal and state) and the open tax years are fiscal 2017 through 2021.