INCOME TAXES

9 Months Ended

Sep. 26, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company's consolidated financial statements in the first nine months of 2020. The Company continues to evaluate the potential impacts the CARES Act may have on its operations and consolidated financial statements in future periods.

The Company recognized income tax expense of $78.4 million and a net tax benefit of $26.0 million for the three and nine months ended September 26, 2020, respectively, resulting in effective tax rates of 16.7% and (3.6)%. Excluding the one-time benefit of $118.8 million recorded in the second quarter of 2020 to reverse a deferred tax liability previously established related to certain unremitted earnings of foreign subsidiaries not permanently reinvested as a result of initiating a supply chain reorganization, and the impacts of the acquisition-related and other charges, the effective tax rates were 17.8% and 16.0% for the three and nine months ended September 26, 2020, respectively. These effective tax rates differ from the U.S. statutory tax

rate primarily due to tax on foreign earnings, the re-measurement of uncertain tax position reserves, an intra-entity transfer of certain intellectual property rights, and the tax benefit of equity compensation.

The Company recognized income tax expense of $59.2 million and $135.5 million for the three and nine months ended September 28, 2019, respectively, resulting in effective tax rates of 20.1% and 15.2%. Excluding the impacts of the acquisition-related and other charges, the effective tax rates were 21.5% and 16.1% for the three and nine months ended September 28, 2019, respectively. These effective tax rates differed from the U.S. statutory tax rate primarily due to tax on foreign earnings, the effective settlements of income tax audits, statute expirations and the re-measurement of uncertain tax position reserves.

The Company considers many factors when evaluating and estimating its tax positions and the impact on income tax expense, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company's unrecognized tax positions will significantly increase or decrease within the next twelve months. However, based on the uncertainties associated with finalizing audits with the relevant tax authorities including formal legal proceedings, it is not possible to reasonably estimate the impact of any such change.