Income Taxes |
6 Months Ended |
|---|---|
Jun. 29, 2019 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
The Company recognized an income tax provision for the three months and six months ended June 29, 2019 of $31.7 million and $50.5 million, respectively, which included a net charge of $1.8 million and $0.1 million, respectively. The net charge of $1.8 million related primarily to an increase in the valuation allowance and the net charge of $0.1 million was related to the aforementioned valuation allowance increase and other various special tax items. The Company recognized an income tax provision for the three months and six months ended June 30, 2018 of $16.4 million and $41.7 million, respectively, which included a net tax benefit of $1.1 million and a net tax charge of $5.6 million, respectively. The net tax benefit of $1.1 million was primarily related to a decrease in the valuation allowance and the net charge of $5.6 million was due primarily to updates related to 2017 tax reform. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, for the three months and six months ended June 29, 2019 was 22.0 percent and 21.1 percent, respectively. The effective tax rate for the three months and six months ended June 30, 2018 was 19.4 percent and 24.0 percent, respectively.
No deferred income taxes have been provided as of June 29, 2019, December 31, 2018 or June 30, 2018 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding taxes on such amounts. The Company continues to provide deferred taxes, as required, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States.
As of June 29, 2019, December 31, 2018 and June 30, 2018, the Company had $2.2 million, $2.3 million and $2.8 million of gross unrecognized tax benefits, including interest, respectively. The Company believes it is reasonably possible that the total
amount of gross unrecognized tax benefits as of June 29, 2019 could decrease by approximately $0.3 million in the next 12 months due to settlements with taxing authorities or lapses in the applicable statute of limitations. Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of the settlement of tax audits, it is possible that there could be significant changes in the amount of unrecognized tax benefits in 2019, but the amount cannot be estimated at this time.
The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2015 through 2017 tax years. Primarily as a result of filing amended returns, which were generated by the closing of federal income tax audits, the Company is still open to state and local tax audits in major tax jurisdictions dating back to the 2012 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2013.
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