|9 Months Ended|
Oct. 01, 2016
|Income Tax Disclosure [Abstract]|
The Company recognized an income tax provision from continuing operations for the three months and nine months ended October 1, 2016 of $32.8 million and $109.1 million, respectively, which included net tax benefits of $3.2 million and $3.3 million, respectively, mainly associated with the reassessment of tax reserves and favorable valuation allowance adjustments. The Company recognized an income tax provision from continuing operations for the three months ended October 3, 2015 of $39.7 million, which included a net charge of $0.8 million, mainly associated with the change in estimates for prior period tax returns. The Company recognized an income tax provision from continuing operations for the nine months ended October 3, 2015 of $110.6 million, which included a net benefit of $8.4 million mainly associated with the internal restructuring of foreign entities and the completion of the 2011 and 2012 Internal Revenue Service (IRS) audits. The effective tax rate from continuing operations, which is calculated as the income tax provision as a percentage of pre-tax income, for the three months and nine months ended October 1, 2016 was 27.8 percent and 29.8 percent, respectively. The effective tax rate from continuing operations for the three months and nine months ended October 3, 2015 was 35.5 percent and 31.9 percent, respectively.
During the second quarter of 2015, the Company initiated an internal restructuring of its foreign entities, including the establishment of a European holding company. This restructuring is being undertaken to more effectively and efficiently manage the Company's foreign cash. The Company continued to implement this internal restructuring during the first nine months of 2016.
No deferred income taxes have been provided as of October 1, 2016, December 31, 2015 or October 3, 2015 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. The Company continues to provide deferred taxes, as required, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States.
As of October 1, 2016, December 31, 2015 and October 3, 2015, the Company had $3.8 million, $4.8 million and $5.0 million of gross unrecognized tax benefits, including interest, respectively. The Company believes it is reasonably possible that the total amount of gross unrecognized tax benefits as of October 1, 2016 could decrease by approximately $1.2 million in the next 12 months due to settlements with taxing authorities or lapses in the statute of limitations. Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of the settlement of tax audits, it is possible that there could be other changes in the amount of unrecognized tax benefits in 2016, but the amount cannot be estimated.
The Company is regularly audited by federal, state and foreign tax authorities. The Company has been audited by the IRS through the 2012 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2014 and 2015 tax years. The IRS has notified the Company that it intends to audit the 2014 tax year. Primarily as a result of filing amended returns, which were generated by the closing of federal income tax audits, the Company is still open to state and local tax audits in major tax jurisdictions dating back to the 2008 taxable year. Following the completion in the fourth quarter of 2015 of the 2008 through 2012 Germany tax audit, the Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2013, except for potential 2012 affirmative claims in Germany.
No definition available.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef