XML 23 R12.htm IDEA: XBRL DOCUMENT v3.25.2
Taxes Based on Income
6 Months Ended
Jun. 28, 2025
Income Tax Disclosure [Abstract]  
Taxes Based on Income Taxes Based on Income
The following table summarizes our income before taxes, provision for income taxes, and effective tax rate:
Three Months Ended Six Months Ended
(Dollars in millions)June 28, 2025June 29, 2024June 28, 2025June 29, 2024
Income before taxes$255.5 $238.4 $482.5 $472.8 
Provision for income taxes66.5 61.6 127.2 123.6 
Effective tax rate26.0 %25.8 %26.4 %26.1 %

Our provision for income taxes for the three and six months ended June 28, 2025 included a net tax charge related to the tax on global intangible low-taxed income (“GILTI”) of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from foreign-derived intangible income (“FDII”). Our provision for income taxes for these periods also included a discrete benefit from decreases in certain tax reserves, including interest and penalties, primarily as a result of closing tax years. In addition, our provision for income taxes for the six months ended June 28, 2025 included a discrete benefit from a favorable ruling related to deductibility of interest expense in a foreign jurisdiction.

During the second quarter of 2025, we received a court decision denying our application of incentive tax rates in a foreign jurisdiction for the 2016-2019 tax years. While we continue to evaluate our options, including further appeal, we amended our tax returns for subsequent tax years to mitigate potential penalties reflecting the change in our judgment with respect to applicable uncertain tax positions. This change had no adverse impact on our provision for income taxes or cash flows as taxes were previously paid at regular tax rates.

Our provision for income taxes for the three and six months ended June 29, 2024 included a net tax charge related to the tax on GILTI of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from FDII. In addition, our provision for income taxes for these periods was also favorably affected by (i) higher tax incentives in certain foreign jurisdictions and the tax impacts resulting from Blue Chip Swap transactions in Argentina and (ii) discrete tax benefits from decreases in certain tax reserves, including interest and penalties, as a result of closing tax years.
The amount of income taxes we pay is subject to ongoing audits by taxing jurisdictions around the world. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts and circumstances existing at the time. We believe that we have adequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate. The final determination of tax audits and any related legal proceedings could materially differ from the amounts currently reflected in our tax provision for income taxes and the related liabilities. We and our U.S. subsidiaries have completed the Internal Revenue Service Compliance Assurance Process through 2022. With limited exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2010.
Subsequent to the end of the second quarter of 2025, the U.S. government enacted a reconciliation bill, commonly referred to as the “One Big Beautiful Bill Act,” which, among other things, included allowance of elective deductions for domestic research and development expenditures, a reinstatement of elective bonus depreciation, and modifications to certain international tax provisions. While we are in the process of evaluating the impact of this new legislation, we currently do not expect it to have a material impact to our financial statements or disclosures.
It is reasonably possible that, during the next 12 months, we may realize a net decrease in our uncertain tax positions, including interest and penalties, of approximately $3 million, primarily as a result of closing tax years.