XML 29 R18.htm IDEA: XBRL DOCUMENT v3.22.2.2
Income Taxes
 9 Months Ended
Oct. 01, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rate

Our effective tax rate for the three months ended October 1, 2022 and October 2, 2021 was 26.2 percent and 25.6 percent, respectively. Our effective tax rate for the nine months ended October 1, 2022 and October 2, 2021 was 25.4 percent and 24.7 percent, respectively.

Our effective tax rate for the three and nine months ended October 1, 2022 and October 2, 2021 were impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation. Each nine-month period also includes a benefit from the vesting of restricted stock units. Our effective tax rate for the three and nine months ended October 2, 2021 also benefited from the partial release of our valuation allowance for state net operating loss carryforwards we anticipated being able to utilize based on our taxable income through the end of the first nine months of fiscal 2021.

Deferred Tax Assets

Quarterly, we assess the carrying value of our deferred tax assets for impairment by evaluating the weight of available evidence at the end of each fiscal quarter. In our evaluation of the weight of available evidence at the end of the current quarter, we considered the recent reported income in the current quarter, as well as the reported income for 2021 and 2020 and the reported losses for 2019, which resulted in a three-year cumulative income situation as positive evidence which carried substantial weight. While this was substantial, it was not the only evidence we evaluated. We also considered evidence related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence. The evidence considered included:

•future reversals of existing taxable temporary differences;
•future taxable income exclusive of reversing temporary differences and carryforwards;
•taxable income in prior carryback years, if carryback is permitted under the tax law; and
•tax planning strategies.

In addition to the positive evidence discussed above, we considered as positive evidence forecasted taxable income, the detail scheduling of timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning
strategies. As of October 1, 2022, in our evaluation of the weight of available evidence, we concluded that our net deferred tax assets were not impaired.