Income Taxes

6 Months Ended

Dec. 27, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

Our tax provision for interim periods has generally been determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period. Our quarterly tax provision and estimate of our annual effective tax rate are subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how we do business, and tax law developments.

We recorded a tax provision of $18.3 million and $19.3 million for the three and six months ended December 27, 2025. Our tax provision for the three months ended December 27, 2025 includes a discrete tax expense of 1.1 million primarily related to the tax expense associated with income from a claim settlement, partially offset by the tax benefit from the revaluation of deferred tax balances, a windfall in connection with stock-based compensation vested during the quarter, and currency re-measurement of certain tax-related accounts. Our tax provision for the six months ended December 27, 2025 includes a discrete tax expense of $0.5 million, primarily related to the tax expense associated with income from a claim settlement, currency re-measurement of certain tax-related accounts, and interest accrual on uncertain tax positions, partially offset by the tax benefit from a windfall in connection with stock-based compensation vested during the periods, revaluation of deferred tax balances, and foreign return to provision differences.

We recorded a tax provision of $18.6 million and $21.8 million for the three and six months ended December 28, 2024, respectively. Our tax provision for the three months ended December 28, 2024 is primarily attributable to the income tax expense from pre-tax earnings, interest on uncertain tax positions and withholding taxes, partially offset by the tax benefit from prior year changes in uncertain tax positions. Our tax provision for the six months ended December 28, 2024 is primarily attributable to the income tax expense from pre-tax earnings, interest on uncertain tax positions, foreign return to provision differences and withholding taxes, partially offset by the tax benefit from prior year changes in uncertain tax positions.

Our estimated effective tax rate for the six months ended December 27, 2025 differs from the 21% U.S. statutory rate primarily due to the income tax expense from foreign income inclusions in the U.S., current year valuation allowance change, and changes in unrecognized tax benefits, partially offset by the income tax benefit from foreign rate differential and various income tax credits.

We regularly assess our ability to realize our deferred tax assets on a quarterly basis and will establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. As of December 27, 2025, we maintain a full valuation allowance on U.S. federal and state and certain foreign deferred tax assets. We will continue to assess the need for a valuation allowance against our remaining deferred tax assets and may increase or decrease our valuation allowance materially in the future.

As of December 27, 2025, we had $63.2 million of unrecognized tax benefits, which, if recognized, would affect the effective tax rate. We are subject to examination of income tax returns by various domestic and foreign tax authorities. The timing of resolution and closure of these tax examinations is highly unpredictable. Although it is possible that certain ongoing tax examinations may be concluded within the next 12 months, we cannot reasonably estimate the impact to tax expense and net income from tax examinations that could be resolved or closed within the next 12 months. Subject to audit timing and uncertainty, we expect the amount of unrecognized tax benefit that would become recognized due to expiration of the statute of limitations and affect the effective tax rate to decrease by $3.3 million over the next 12 months.