Income Taxes

9 Months Ended

Mar. 02, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's process for determining the provision for income taxes for the three and nine months ended March 2, 2024 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates. The effective tax rates were 16.0% and 31.2%, respectively, for the three month periods ended March 2, 2024 and March 4, 2023. The year over year change in the effective tax rate for the three months ended March 2, 2024 resulted from the current quarter having favorable discrete impacts from return to provision true-ups related to the United States research and development tax credit and the prior year quarter having no comparable impacts. For the three months ended March 2, 2024, the effective tax rate is lower than the United States federal statutory rate due to favorable discrete impacts from return to provision true-ups related to the United States research and development tax credit. For the three months ended March 4, 2023, the effective tax rate was higher than the United States federal statutory rate due to an unfavorable tax adjustment in the quarter related to stock compensation.

The effective tax rates were 20.5% and 19.5%, respectively, for the nine months ended March 2, 2024 and March 4, 2023. The year over year increase in the effective rate for the nine months ended March 2, 2024 resulted from the same nine months in the prior year having more favorable foreign tax credit impacts in the United States than the current nine months. For the nine months ended March 2, 2024, the effective tax rate is slightly lower than the United States federal statutory rate due to favorable impacts from return to provision true-ups related to the United States research and development tax credit. For the nine months ended March 4, 2023, the effective tax rate was lower than the United States federal statutory rate due to the favorable impact of increased foreign tax credits in the United States resulting from the recapture of prior year overall domestic loss.

The Company recognizes interest and penalties related to uncertain tax benefits through Income tax expense in its Condensed Consolidated Statements of Comprehensive Income. Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and nine months ended March 2, 2024 and March 4, 2023.

The Company's recorded liability for potential interest and penalties related to uncertain tax benefits was:

(In millions)	March 2, 2024		June 3, 2023
Liability for interest and penalties	$	0.9	$	0.7
Liability for uncertain tax positions, current	$	1.7	$	1.6

The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next twelve months as a result of these audits. Tax payments related to these audits, if any, are not expected to be material to the Company's Condensed Consolidated Statements of Comprehensive Income.

For the majority of tax jurisdictions, the Company is no longer subject to state, local, or non-United States income tax examinations by tax authorities for fiscal years before 2020.