Income Taxes

6 Months Ended

Jul. 02, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision is calculated using an estimated annual effective tax rate, based upon estimates of annual income, permanent items, statutory tax rates and planned tax strategies in the various jurisdictions in which we operate except that certain loss jurisdictions and discrete items, such as the resolution of uncertain tax positions and stock-based accounting income tax benefits, are treated separately.

The Company’s effective income tax rate for the second quarter and first six months of 2023 was 21.0% and 20.6%, respectively, compared with an effective income tax rate for the second quarter and first six months of 2022 of 22.7% and 9.6%, respectively. The second quarter and first six months of 2023 includes net discrete income tax benefits of $1.4 million and $8.0 million, respectively, compared with net discrete income tax benefits of $1.0 million and $57.5 million for the second quarter and first six months of 2022, respectively. The second quarter and first six months of 2023 net discrete tax benefits include $1.3 million and $7.2 million, respectively, related to stock-based accounting compared with $1.8 million and $8.5 million, of net discrete tax benefits related to stock-based accounting for the second quarter and first six months of 2022, respectively. The second quarter and first six months of 2023 also includes net discrete income tax expense of $0.4 million and $0.7 million, respectively, primarily related to changes in acquisition-related tax reserves. The second quarter and first six months of 2022 also includes net discrete income tax expense of $0.6 million and net discrete income tax benefits of $49.4 million primarily related to the resolution of certain FLIR tax reserves. Excluding the net discrete income tax items in both periods, the effective tax rates would have been 21.6% and 22.3% for the second quarter and first six months of 2023, respectively, and 23.1% for both the second quarter and first six months of 2022.