Income Taxes

6 Months Ended

Dec. 29, 2019

Income Tax Disclosure [Abstract]

Income Taxes

13.  Income Taxes

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

	For the Three Months Ended						For the Six Months Ended
	December 29, 2019			December 30, 2018			December 29, 2019			December 30, 2018
Provision (benefit) for income taxes	$	507		$	(2,288	)	$	1,228		$	536
Effective tax rate		55.3	%		204.8	%		23.0	%		15.2	%

Income Tax Expense

UNIFI’s provision for income taxes for the six months ended December 29, 2019 and December 30, 2018 was calculated by applying an estimate of the annual effective tax rate for the full fiscal year to year-to-date income.  Tax effects of significant and unusual, or infrequently occurring, items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

The effective tax rate for the three months ended December 29, 2019 was higher than the U.S. federal statutory rate primarily due to U.S. tax on Global Intangible Low-Tax Income (“GILTI”), losses in tax jurisdictions for which no tax benefit could be recognized, foreign withholding taxes, and lower-than-expected income before income taxes. These rate impacts were partially offset by the use of foreign tax credits generated in both current and prior tax years. The effective tax rate for the six months ended December 29, 2019 was higher than the U.S. federal statutory rate primarily due to U.S. tax on GILTI, losses in tax jurisdictions for which no tax benefit could be recognized, and foreign withholding taxes. These rate impacts were partially offset by the use of foreign tax credits generated in both current and prior tax years.

The effective tax rate for the three months ended December 30, 2018 was higher than the U.S. federal statutory rate primarily due to the benefits of tax credits related to prior years, which exceed the loss before income taxes.  These benefits were partially offset by earnings taxed at higher rates in foreign jurisdictions, losses in tax jurisdictions for which no tax benefit could be recognized, U.S. tax on GILTI, and non-deductible executive compensation. The effective tax rate for the six months ended December 30, 2018 was lower than the U.S. federal statutory rate primarily due to the benefits of tax credits related to prior years.  These benefits were partially offset by earnings taxed at higher rates in foreign jurisdictions, losses in tax jurisdictions for which no tax benefit could be recognized, U.S. tax on GILTI, and non-deductible executive compensation.  

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.