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Income Taxes
9 Months Ended
Sep. 29, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
The Company’s effective tax rate from continuing operations for the three and nine-month periods ended September 29, 2017 was 21.6% and 17.7%, respectively, as compared to 15.5% and 26.6% for the three and nine-month periods ended September 30, 2016, respectively.
The Company’s effective tax rate for 2017 and 2016 differs from the U.S. federal statutory rate of 35.0% due principally to the Company’s earnings outside the United States that are indefinitely reinvested and taxed at rates lower than the U.S. federal statutory rate. The effective tax rate for the nine-month period ended September 29, 2017 includes a benefit from the release of reserves upon the expiration of statutes of limitations and audit settlements, excess tax benefits from stock-based compensation, as well as higher tax benefits from restructuring charges that are predominantly in the United States, which in aggregate decreased the reported tax rate by 3.3%. The effective tax rate for the three and nine-month periods ended September 30, 2016 includes a higher tax rate associated with the loss on the early extinguishment of borrowings during the third quarter of 2016 which lowered the effective tax rate by 6.0% and 1.0%, respectively. The effective tax rate for the nine-month periods ended September 30, 2016 also includes charges related to the repatriation of earnings and legal entity realignments associated with the Separation and higher tax rate on the gain from sale of marketable equity securities which in aggregate increased the effective tax rate by 6.6%.
Tax authorities in Denmark have raised significant issues related to interest accrued by certain of the Company’s subsidiaries. On December 10, 2013, the Company received assessments from the Danish tax authority (“SKAT”) totaling approximately DKK 1.5 billion including interest through September 29, 2017 (approximately $235 million based on the exchange rate as of September 29, 2017), imposing withholding tax relating to interest accrued in Denmark on borrowings from certain of the Company’s subsidiaries for the years 2004-2009. The Company is currently in discussions with SKAT and anticipates receiving an assessment for years 2010-2012 totaling approximately DKK 874 million including interest through September 29, 2017 (approximately $139 million based on the exchange rate as of September 29, 2017). Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company appealed these assessments to the National Tax Tribunal in 2014 and intends on pursuing this matter through the European Court of Justice should this appeal be unsuccessful. The ultimate resolution of this matter is uncertain, could take many years, and could result in a material adverse impact to the Company’s financial statements, including its effective tax rate.