Income Taxes

3 Months Ended

Apr. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

In the three months ended April 3, 2022, our income tax benefit of $11.6 million on a loss from continuing operations before income taxes of $14.1 million was primarily due to the reversal of deferred taxes previously accrued for California as a result of the enactment of Senate Bill 113 which restored the ability to utilize net operating losses in 2022. Our income tax benefit of $5.1 million in the three months ended April 4, 2021 on a loss from continuing operations before income taxes of $52.9 million was primarily due to the windfall benefit from stock-based compensation deduction, and true-up of estimated state tax liability.

In the three months ended April 3, 2022, our income tax benefit of $0.3 million on a loss from discontinued operations before income taxes of $26.3 million was primarily due to the state tax benefit of year to date operating losses. Our income tax benefit of $0.1 million in the three months ended April 4, 2021 on a loss from discontinued operations before income taxes of $1.9 million was primarily due to the state tax benefit of year to date operating losses.

During the three months ended April 3, 2022, in accordance with FASB guidance for interim reporting of income tax, we have computed our provision for income taxes based on a projected annual effective tax rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision.

Total liabilities associated with uncertain tax positions were $15.2 million and $14.7 million as of April 3, 2022 and January 2, 2022, respectively. The increase of $0.5 million was primarily due to incremental accrual of interest and penalties on existing reserves and foreign exchange rate changes for non-US liabilities.