Income Taxes

9 Months Ended

Mar. 29, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act includes various income tax provisions such as the use of net operating losses arising in prior taxable years, for which the Company has recorded a benefit in its income tax provision for the third quarter of fiscal year 2020 of approximately $7.5 million. Also during the third quarter of fiscal year 2020, the Company recorded a full valuation allowance against its U.S. and state deferred tax assets in the amount of approximately $70.3 million.

When calculating the income tax provision for the third quarter of fiscal year 2020, the Company used an estimate of the annual effective tax rate based upon information known at each interim period. The actual effective tax rate is adjusted each quarter based upon changes to the forecast as compared to the beginning of the fiscal year and each following interim period. For the third quarter of fiscal year 2019, the Company used an actual effective tax rate calculation. The effective tax rate for the third quarter of fiscal year 2020 was (55.6)% compared to 12.3% for the same period last year. The effective tax rate for the first nine months of fiscal year 2020 was (25.4)%, compared to 28.7% for the same period last year. The tax rates for fiscal year 2020 were more significantly impacted by losses for which the Company does not receive a tax benefit, including the aforementioned U.S. and state valuation allowance. The Company recorded an income tax expense of approximately $1.1 million related to the inclusion of foreign earnings as a result of U.S. tax legislation during fiscal year 2019.