Income Taxes

3 Months Ended

Apr. 25, 2020

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Our interim income tax provisions are based on the effective income tax rate expected to be applicable for the full fiscal year, adjusted for specific items that are required to be recognized in the period in which they occur. Deferred tax assets and liabilities are based on the enacted tax rate that will apply in future periods when such assets and liabilities are expected to be settled or realized.

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, among other things, includes tax provisions relating to refundable payroll tax credits, the deferral of employer’s social security payments, and modifications to net operating loss (“NOL”) carryback provisions. During the three months ended April 25, 2020, we recognized an income tax benefit of $2.6 million from a tax loss carryback under the CARES Act. The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows.

Our effective income tax rate of (9.0)% for the three months ended April 25, 2020, differs from the statutory rates primarily due to the $53.3 million goodwill impairment charge which was mostly non-deductible for income tax purposes, and due to the benefit from a $2.6 million tax loss carryback under the CARES Act. Other fluctuations in our effective income tax rate from the statutory rates each period are primarily attributable to the difference in income tax rates from state to state where work was

performed during the periods, variances in non-deductible and non-taxable items during the periods, and the impact of the vesting and exercise of share-based awards.