Income Taxes

6 Months Ended

Jul. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. INCOME TAXES

The Company’s provision for income taxes is recorded on an interim basis based upon the Company’s estimate of the annual effective income tax rate for the full year applied to “ordinary” income or loss, adjusted each quarter for discrete items.

The Company recorded an income tax benefit of $0.3 million and income tax expense of $2.3 million for the three and six-month periods ended July 2, 2022, respectively, and income tax expense of $0.2 million and $0.5 million for the three and six-month periods ended July 3, 2021, respectively. The Company’s effective tax rate was 0.1% and negative 0.5% for the three and six-month periods ended July 2, 2022, respectively, and 12.4% and 6.5% for the three and six-month periods ended July 3, 2021, respectively. The effective tax rates for the three and six-month periods ended July 2, 2022 and July 3, 2021 differ from the statutory rate of 21% primarily due to the changes in the valuation allowance recorded against certain deferred tax assets, and separate state and local income taxes on taxable subsidiaries.

For the six-month period ended July 2, 2022, there were no material changes to the Company's uncertain tax positions. There has been no change to the Company's policy that recognizes potential interest and penalties related to uncertain tax positions in income tax expense in the accompanying interim unaudited consolidated statements of operations.