Income taxes

9 Months Ended

Mar. 28, 2026

Income taxes

Income taxes

7. Income taxes

The following discussion of the effective tax rate for the periods presented in the consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate.

The Company’s effective tax rate on its income before taxes was 32.9% in the third quarter of fiscal 2026. During the third quarter of fiscal 2026, the Company’s effective tax rate was unfavorably impacted primarily by (i) the effect of foreign exchange gain recognition, (ii) the mix of income in higher tax jurisdictions, (iii) increases to unrecognized tax benefit reserves net of settlements, and (iv) increases to valuation allowances.

During the third quarter of fiscal 2025, the Company’s effective tax rate on its income before taxes was a benefit of 12.5%. During the third quarter of fiscal 2025, the Company’s effective tax rate was favorably impacted primarily by (i) increases in tax attribute carryforwards and (ii) the mix of income in lower tax jurisdictions.

For the first nine months of fiscal 2026, the Company’s effective tax rate on its income before taxes was 32.4%. The effective tax rate for the first nine months of fiscal 2026 was unfavorably impacted primarily by (i) increases to unrecognized tax benefit reserves net of settlements, (ii) the effect of foreign exchange gain recognition, (iii) increases to valuation allowances, and (iv) the effect of changes in tax rates enacted in foreign jurisdictions.

During the first nine months of fiscal 2025, the Company’s effective tax rate on its income before taxes was 3.7%. The effective tax rate for the first nine months of fiscal 2025 was favorably impacted primarily by increases in tax attribute carryforwards that are partially offset by increases to valuation allowances.

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (the “OBBB”). The bill includes extensions of current tax provisions and makes many tax changes. Most of the provisions enacted by the OBBB take effect in fiscal year 2025 to 2027. The Company expects no material adverse impact related to the OBBB in fiscal 2026. The Company will continue to monitor OBBB developments and update the potential impacts on its consolidated financial statements as new information becomes available.