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Income Taxes
6 Months Ended
Jul. 04, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete tax items.
During the six months ended July 4, 2021, the Company recorded a total income tax provision of $7.8 million on pre-tax income of $30.2 million resulting in an effective tax rate of 25.7%, as compared to a total income tax provision of $4.1 million on a pre-tax loss of $93.3 million resulting in an effective tax rate of (4.4)% during the six months ended July 5, 2020. The effective tax rate for the period ended July 5, 2020 was primarily impacted by a non-deductible goodwill impairment. Excluding the impact of the goodwill impairment, the effective tax rate was 17.8% during the six months ended July 5, 2020. The increase in the effective tax rate as compared to the period ended July 5, 2020, excluding the non-deductible goodwill impairment, was due to the one-time favorable impacts of amending prior year tax returns during the six months ended July 5, 2020 which was offset by favorable changes related to company-owned life insurance in the current period.
In the first six months of 2021, the Company decreased its liability for unrecognized tax benefits by $0.7 million. The decrease was primarily due to settlements with taxing authorities and a lapse of applicable statute of limitations. As of July 4, 2021, the Company had accrued approximately $10.1 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of July 4, 2021 reflects a reduction for $3.0 million of these unrecognized tax benefits.
Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations. Based on information currently available, it is reasonably possible that approximately $1.7 million of unrecognized tax benefits may be recognized within the next 12 months due to a lapse of statute of limitations.