Income Taxes

9 Months Ended

Sep. 29, 2019

Income Taxes [Abstract]

Income Taxes

Note 7.  Income Taxes

Provision for taxes was $2.6 million and $17.0 million during the three and nine-month periods ended September 29, 2019, respectively. Provision for taxes was $9.7 million and $29.3 million during the three and nine-month periods ended September 30, 2018, respectively. The effective tax rate was 6.4% for the three months ended September 29, 2019 as compared with 18.7% in the prior year and 13.9%  for the nine months ended September 29, 2019 as compared with 18.8% in the prior year.  The lower effective tax rate in the current year was primarily due to tax benefits related to the expiration of a tax statute of limitations, which was recorded in the third quarter of 2019.

As of September 29, 2019, the Company had approximately $9.2 million of total unrecognized income tax benefits. Included in this amount were a total of $6.2 million of unrecognized income tax benefits that, if recognized, would affect the Company’s effective tax rate.  While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The Company’s accounting policy is to recognize interest and penalties accrued relating to unrecognized income tax benefits as part of its provision for income taxes.  The Company had net decreases of approximately $0.4 million and $0.7 million during the three and nine-months ended September 29, 2019, respectively, and had an accrued balance of $2.2 million of interest and penalties as of September 29, 2019.

The Company’s accounting policy is also to record derecognition of unrecognized income tax benefits as part of its provision for income taxes.  Included in the provision for income taxes for the three-month and nine-month periods ended September 29, 2019 was a $7.8 million tax benefit relating to the derecognition of an unrecognized tax benefit due to the expiration of the statute of limitations.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S.  In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings.  The Company, with a few exceptions (none of which are material), is no longer subject to income tax examinations by tax authorities for years prior to 2010.