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Income Taxes
12 Months Ended
Jun. 29, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

13. Income Taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state, and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax

items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

Income tax expense for fiscal 2024, fiscal 2023 and fiscal 2022 consisted of the following:

 

(In millions)

 

For the fiscal
year ended
June 29, 2024

 

 

For the fiscal
year ended
July 1, 2023

 

 

For the fiscal
year ended
July 2, 2022

 

Current income tax expense:

 

 

 

 

 

 

 

 

 

Federal

 

$

109.2

 

 

$

95.3

 

 

$

38.2

 

State

 

 

36.2

 

 

 

28.8

 

 

 

10.6

 

Foreign

 

 

4.8

 

 

 

2.7

 

 

 

1.0

 

Total current income tax expense

 

 

150.2

 

 

 

126.8

 

 

 

49.8

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

 

10.3

 

 

 

17.8

 

 

 

1.0

 

State

 

 

0.2

 

 

 

2.3

 

 

 

4.4

 

Foreign

 

 

0.2

 

 

 

(0.1

)

 

 

(0.6

)

Total deferred income tax expense

 

 

10.7

 

 

 

20.0

 

 

 

4.8

 

Total income tax expense, net

 

$

160.9

 

 

$

146.8

 

 

$

54.6

 

 

The Company’s effective income tax rate for continuing operations for fiscal 2024, fiscal 2023 and fiscal 2022 was 27.0%, 27.0%, and 32.7%, respectively. Actual income tax expense differs from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in fiscal 2024, fiscal 2023, and fiscal 2022 to earnings before income taxes as follows:

 

(In millions)

 

For the fiscal
year ended
June 29, 2024

 

 

For the fiscal
year ended
July 1, 2023

 

 

For the fiscal
year ended
July 2, 2022

 

Federal income tax expense computed at statutory rate

 

$

125.3

 

 

$

114.2

 

 

$

35.1

 

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

 

 

 

State income taxes, net of federal income tax benefit

 

 

29.1

 

 

 

25.3

 

 

 

13.1

 

Foreign taxes

 

 

5.0

 

 

 

2.5

 

 

 

 

Non-deductible expenses and other

 

 

10.9

 

 

 

6.9

 

 

 

9.6

 

Stock-based compensation

 

 

(4.5

)

 

 

(1.2

)

 

 

(1.9

)

Other, including investment tax credits

 

 

(4.9

)

 

 

(0.9

)

 

 

(1.3

)

Total income tax expense, net

 

$

160.9

 

 

$

146.8

 

 

$

54.6

 

 

Deferred income taxes are recorded based upon the tax effects of differences between the financial statement and tax bases of assets and liabilities and available tax loss and credit carryforwards. Temporary differences and carry-forwards that created significant deferred tax assets and liabilities were as follows:

 

(In millions)

 

As of
June 29, 2024

 

 

As of
July 1, 2023

 

Deferred tax assets:

 

 

 

 

 

 

Lease obligations

 

$

126.5

 

 

$

132.6

 

Accrued employee benefits

 

 

15.7

 

 

 

16.8

 

Inventories

 

 

13.8

 

 

 

8.8

 

Net operating loss carry-forwards

 

 

9.8

 

 

 

8.5

 

Allowance for doubtful accounts

 

 

8.9

 

 

 

9.3

 

Stock-based compensation

 

 

7.5

 

 

 

8.7

 

Insurance reserves

 

 

5.6

 

 

 

4.5

 

Tax credit carry-forwards

 

 

2.7

 

 

 

3.5

 

Other assets

 

 

7.3

 

 

 

7.5

 

Total gross deferred tax assets

 

 

197.8

 

 

 

200.2

 

Less: Valuation allowance

 

 

(1.7

)

 

 

(2.1

)

Total net deferred tax assets

 

 

196.1

 

 

 

198.1

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment

 

 

347.8

 

 

 

310.7

 

 Right of use assets

 

 

122.0

 

 

 

131.2

 

Basis difference in intangible assets

 

 

118.3

 

 

 

93.7

 

Inventories

 

 

77.3

 

 

 

85.1

 

Prepaid expenses

 

 

25.6

 

 

 

16.9

 

Other comprehensive income

 

 

1.5

 

 

 

4.9

 

Other liabilities

 

 

1.5

 

 

 

1.8

 

Total deferred tax liabilities

 

 

694.0

 

 

 

644.3

 

Total net deferred income tax liability

 

$

497.9

 

 

$

446.2

 

 

As of June 29, 2024, substantially all federal, state and local, and foreign income tax matters have been concluded for years prior to fiscal year 2014.

On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy. We are continuing to evaluate the potential impact on future periods of the Framework pending legislative adoption by individual countries.