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Income Taxes
 9 Months Ended
Oct. 02, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe Company calculates its interim income tax provision in accordance with ASC 270, Interim Reporting, and ASC 740, Accounting for Income Taxes. At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.
For the three months ended October 2, 2022 and October 3, 2021, the Company recognized a Provision for income taxes of $12.1 million and $65.8 million, respectively, in relation to Income before provision for income taxes of $31.3 million and $281.5 million, respectively, resulting in effective tax rates of 39% and 23%, respectively. As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in certain U.S. states. For the three months ended October 2, 2022, the effective tax rate was also impacted by operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances. For the three months ended October 3, 2021, the effective tax rate was impacted primarily by income taxes owed in U.S. states, partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, which were immaterial to the effective tax rate in the three months ended October 2, 2022.
For the nine months ended October 2, 2022 and October 3, 2021, the Company recognized a Provision for income taxes of $176.4 million and $112.1 million, respectively, in relation to Income before provision for income taxes of $694.8 million and $525.0 million, respectively, resulting in effective tax rates of 25% and 21%, respectively. As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in certain U.S. states. For the nine months ended October 3, 2021, the effective tax rate was partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, which were immaterial to the effective tax rate in the nine months ended October 2, 2022.
The Company is subject to periodic audits by domestic and foreign tax authorities. Due to the carryforward of unutilized credits, the Company’s federal tax years from 2012 and onwards are subject to examination by the U.S. authorities. The Company’s state and foreign tax years for 2001 and onwards are subject to examination by applicable tax authorities. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax laws applied to the facts of each matter.
The balance of unrecognized tax benefits at October 2, 2022, not including interest and penalties, was $45.2 million, of which $32.9 million could affect the effective income tax rate in future periods, if recognized. The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense. At October 2, 2022, the Company had approximately $8.8 million of interest and penalties accrued related to unrecognized tax benefits. The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $3.0 million.