Income Taxes

6 Months Ended

Jan. 01, 2023

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

The (benefit) provision for income taxes and effective tax rate were as follows:

	For the Three Months Ended						For the Six Months Ended
	January 1, 2023			December 26, 2021			January 1, 2023			December 26, 2021
(Benefit) provision for income taxes	$	(3,070	)	$	3,185		$	(336	)	$	7,598
Effective tax rate		14.5	%		77.4	%		1.3	%		44.2	%

Income Tax Expense

UNIFI’s (benefit) provision for income taxes for the six months ended January 1, 2023 and December 26, 2021 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rates for the three months and six months ended January 1, 2023 varied from the U.S. federal statutory rate primarily due to losses for which UNIFI does not expect to realize a future benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years.

The effective tax rates for the three months and six months ended December 26, 2021 were higher than the U.S. federal statutory rate primarily due to an increase in the valuation allowance for deferred tax assets, earnings taxed at higher rates in foreign jurisdictions, and deferred tax on unremitted earnings.

Unrecognized Tax Benefits

UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient. Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.