Income Taxes

6 Months Ended

Jun. 26, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
(dollars in thousands)	JUNE 26, 2022			JUNE 27, 2021			JUNE 26, 2022			JUNE 27, 2021
(Loss) income before provision for income taxes	$	(50,144)		$	107,574		$	43,479		$	183,965
Provision for income taxes	$	11,536		$	22,688		$	27,465		$	29,281
Effective income tax rate	(23.0)		%	21.1		%	63.2		%	15.9		%

The effective income tax rate for the thirteen weeks ended June 26, 2022 includes the impact of nondeductible losses associated with the 2025 Notes Partial Repurchase which, relative to a pre-tax book loss during the quarter, resulted in a negative effective income tax rate.

The effective income tax rate for the twenty-six weeks ended June 26, 2022 increased by 47.3 percentage points as compared to the twenty-six weeks ended June 27, 2021. The increase was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during the twenty-six weeks ended June 26, 2022.

On December 28, 2021, the U.S. Treasury and the Internal Revenue Service released final regulations that, among other things, provide guidance on several aspects of the foreign tax credit rules. As part of the guidance issued, these regulations change longstanding foreign tax credit regulations that now make foreign taxes paid to certain countries no longer creditable in the United States. The Company expects that a portion of post-2022 foreign taxes paid will not be creditable in the United States. Furthermore, the impact of these regulations will result in the utilization of existing prior year foreign tax credit carryforwards for which the Company had previously recorded a valuation allowance. The valuation allowance related to the credits expected to be utilized has been released during the thirteen and twenty-six weeks ended June 26, 2022.

The effective income tax rate for the thirteen weeks ended June 26, 2022 was lower than the Company’s blended federal and state statutory rate of approximately 26%. The income tax rate includes the impact of nondeductible losses associated with the 2025 Notes Partial Repurchase which, relative to a pre-tax book loss during the quarter, resulted in a negative effective income tax rate.

The effective income tax rate for the twenty-six weeks ended June 26, 2022 was higher than the statutory rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during the twenty-six weeks ended June 26, 2022.

The effective income tax rates for the thirteen and twenty-six weeks ended June 27, 2021 were lower than the statutory rate primarily due to the benefit of FICA tax credits on certain employees’ tips.