Income Taxes

9 Months Ended

Sep. 29, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision (benefit) for the three and nine months ended September 29, 2019, was $(0.2) million, or an effective tax rate of (1.9)%, and $2.7 million, or an effective tax rate of 9.4%, respectively. The income tax provision for the three and nine months ended September 30, 2018, was $5.5 million, or an effective tax rate of 25.2%, and $6.7 million, or an effective tax rate of 27.2%, respectively. The decrease in the effective tax rate and tax expense for the three and nine months ended September 29, 2019, compared to the prior year periods, resulted primarily from the resolution of income tax examinations for the United Kingdom and Germany that concluded during the three months ended September 29, 2019. The resolution of these examinations resulted in a favorable adjustment to the Company’s uncertain tax positions. Additionally, during the three-month period, the Company finalized its US federal income tax return resulting in the recognition of favorable benefits from the true up of previous estimates. These favorable adjustments were partially offset by an increase in the overall forecasted effective tax rate caused by an estimate of the US federal Base Erosion Anti-abuse Tax (BEAT). In addition to the items noted for the three months ended September 29, 2019, the effective tax rate for the nine months ended September 29, 2019 also included a benefit related to the closing of the French tax audit.

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The future foreign tax rate could be affected by changes in the composition in earnings in countries with tax rates differing from the U.S. federal rate. The Company is under examination in various U.S. jurisdictions.

The Company files income tax returns in the U.S. federal jurisdiction as well as various state, local, and foreign jurisdictions. Due to the uncertain nature of ongoing tax audits, the Company has recorded its liability for uncertain tax positions as part of its long-term liability as payments cannot be anticipated over the next twelve months. The existing tax positions of the Company continue to generate an increase in the liability for uncertain tax positions. The liability for uncertain tax positions may be reduced for liabilities that are settled with taxing authorities or on which the statute of limitations could expire without assessment from tax authorities. The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions in the next twelve months is approximately $0.7 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities.