Income Taxes

3 Months Ended

Apr. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision is calculated using an estimated annual effective tax rate, based upon expected annual income, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which the Company operates. However, losses in certain jurisdictions and discrete items, such as the resolution of uncertain tax positions, are treated separately.

The Company’s effective income tax rate for the first quarter of 2022 was a negative 4.7% compared with an effective income tax rate of 16.4% for the first quarter of 2021. The first quarter of 2022 includes net discrete income tax benefits of $56.5 million compared with net discrete income tax benefits of $6.3 million. The first quarter of 2022 net discrete income tax amounts include a non-cash income tax benefit of $50.0 million primarily related to the resolution of certain FLIR tax reserves and $6.7 million related to share-based accounting. The first quarter of 2021 net discrete tax benefits include $4.8 million related to share-based accounting. Excluding the net discrete income tax items in both periods, the effective tax rates would have been 23.1% for the first quarter of 2022 and 22.6% for the first quarter of 2021.

See Note 2 to these Notes to Condensed Consolidated Financial Statements for information regarding FLIR historical tax matters that existed at the date of the acquisition, including the STA’s reassessment of tax for the year ending December 31, 2012 related to one of FLIR’s non-operating subsidiaries in Sweden.