INCOME TAXES |
3 Months Ended |
|---|---|
Mar. 28, 2020 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES
The effective income tax rate for the three months ended March 2020 was 75.6% compared to 44.7% in the 2019 period. The three months ended March 2020 included a net discrete tax benefit of $7.7 million, primarily comprised of $6.3 million of tax benefit recognized due to the enactment of Swiss tax reform in the canton of Ticino and $0.9 million of tax benefit related to state tax return filings. The $7.7 million net discrete tax benefit in the three months ended March 2020 increased the effective income tax rate by 69.3%.
The effective tax rate for the three months ended March 2019 included a net discrete tax expense of $1.2 million, primarily comprised of $2.8 million of net tax expense related to unrecognized tax benefits and interest, $2.2 million of tax benefit related to stock compensation, and $0.2 million of tax expense related to adjustments of previously recorded amounts based on final regulations for the transition tax. The $1.2 million net discrete tax expense in the three months ended March 2019 increased the effective income tax rate by 4.4%.
The effective income tax rate without discrete items for the three months ended March 2020 was 6.3% compared to 40.3% in the 2019 period. The reduction was primarily due to a higher percentage of income in lower tax rate jurisdictions and a reduction in losses incurred in certain foreign jurisdictions for which no related tax benefit was recognized.
The Company will file a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. The Company has not filed its initial consolidated U.S. federal income tax return; therefore, there are no open IRS examinations. However, the Company is currently subject to examination by various U.S. state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company's provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on the Company’s financial statements. Management believes that some of these audits and negotiations will conclude in the next 12 months.
During the three months ended March 2020, the amount of net unrecognized tax benefits and associated interest increased by $0.2 million to $18.1 million. Management also believes that it is reasonably possible that the amount of unrecognized tax benefits may decrease by $0.9 million within the next 12 months due to settlement of audits and expiration of statutes of limitations, $0.7 million of which would reduce income tax expense.
|