Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's effective tax rate for the first nine months of 2020 was 40.0% compared with 23.4% in the first nine months of 2019 and 23.4% for the full year 2019. The increase in the first nine months of 2020 effective tax rate from the full year 2019 rate is primarily due to a decrease in projected earnings in jurisdictions with lower rates, the recognition of tax expense related to the completed sale of the Seeger business during the first quarter of 2020, the impact of the global intangible low-taxed income tax on foreign earnings in the U.S. (despite lower U.S. income) and excess tax charges related to stock awards. The impact of these items was partially offset by a benefit related to a refund of withholding taxes that were previously paid and included in tax expense in prior years and a reduction of the statutory tax rate at one of our international operations, both of which were recognized in the first quarter of 2020.

The Aerospace and Industrial segments have a number of multi-year tax holidays in Singapore and China. These holidays are subject to the Company meeting certain commitments in the respective jurisdictions. Aerospace was granted a multi-year income tax holiday for operations recently established in Malaysia. The Company expected the holiday to begin in the third quarter of 2020, however, due to the impact of COVID-19, the start date of the holiday has been delayed. Discussions are currently being held regarding the effective start date of the holiday, with a likelihood that the holiday will be deferred until 2022. Once the start date is established, the holiday is scheduled to remain effective for ten years. The Industrial Segment has a holiday in China, for which it currently receives benefit, that is scheduled to expire at the end of 2020. The Company plans to re-apply for the holiday, but does not expect notification of potential approval until the latter half of 2021.