Income Taxes

6 Months Ended

Jun. 16, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure

4. Income Taxes

The Company's income tax expense (benefit) was as follows:

	Successor		Predecessor
	Three Months Ended March 31, 2023		Three Months Ended April 1, 2022
Current tax expense (benefit)	$	2.6	$	(5.0)
Deferred tax benefit	(33.4)		(0.9)
Income tax benefit	$	(30.8)	$	(5.9)

The Company recognized an income tax benefit of $30.8 million on a loss from continuing operations before income taxes of $280.1 million for the three months ended March 31, 2023 (Successor). This resulted in an effective tax rate of 11.0%. The income tax provision consisted of a deferred income tax benefit predominately related to intangible asset amortization, accretion expense associated with our settlement obligations and debt, inventory step-up amortization expense and other operating activity, partially offset by current income tax expense related to a decrease in prepaid income taxes.

The income tax benefit of $30.8 million for the three months ended March 31, 2023 (Successor) consisted of $27.4 million attributed to pretax earnings in various jurisdictions, $2.1 million attributed to separation costs, reorganization items, net and restructuring charges, and $1.3 million attributed to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

The Company recognized an income tax benefit of $5.9 million on a loss from continuing operations before income taxes of $126.1 million for the three months ended April 1, 2022 (Predecessor). This resulted in an effective tax rate of 4.7%. The current and deferred income tax benefits were predominantly related to an increase to prepaid taxes and intangible asset amortization partially offset by utilization of loss carryforwards in non-valuation allowance jurisdictions.

The income tax benefit of $5.9 million for the three months ended April 1, 2022 (Predecessor) consisted of $4.8 million attributed to pretax earnings in various jurisdictions and $1.9 million attributed to separation costs, reorganization items, net and restructuring charges, partially offset by $0.8 million attributed to the CARES Act.

During the three months ended March 31, 2023 (Successor), net cash refunds for income taxes were $136.3 million, including refunds of $139.3 million received as a result of provisions in the CARES Act and net payments of $3.0 million related to operational activity. During the three months ended April 1, 2022 (Predecessor), net cash payments for income taxes were $2.7 million.

The Company's unrecognized tax benefits, excluding interest, totaled $24.8 million as of both March 31, 2023 (Successor) and December 30, 2022 (Successor). If favorably settled, these balances would benefit the effective tax rate. The total amount of accrued interest and penalties related to these obligations was $3.1 million and $2.8 million as of March 31, 2023 (Successor) and December 30, 2022 (Successor), respectively.

Within the next twelve months, the unrecognized tax benefits and the related interest and penalties are not expected to significantly change.

Certain of the Company's subsidiaries continue to be subject to examination by taxing authorities. The earliest open years subject to examination for both the U.S federal and state jurisdictions and various foreign jurisdictions, including Ireland, Japan, Luxembourg, Switzerland and the United Kingdom is 2013.