INCOME TAXES

6 Months Ended

Jul. 01, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company’s effective tax rates remained relatively consistent for the three months ended July 1, 2023 and June 25, 2022 at 22.7% and 23.2%, respectively. The Company’s effective tax rates for the six months ended July 1, 2023 and June 25, 2022 were 21.7% and 19.2%, respectively. The increase in the six month effective tax rates from the prior year period was primarily attributable to a decreased tax benefit from stock-based compensation deductions in the six months ended July 1, 2023.

For the three months ended July 1, 2023, the Company’s unrecognized tax benefits increased by $1.1 million to $25.6 million, primarily due to increases in research and development tax credit reserves. For the three months ended July 1, 2023, the amount of unrecognized income tax benefits that would impact the effective tax rate increased by $0.6 million to $21.8 million for the same reasons discussed above. The accrued interest on unrecognized tax benefits was $1.0 million as of July 1, 2023. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $4 million over the next twelve-month period, primarily due to audit settlements and expiring statutes of limitations.

The Company’s prepaid and accrued tax positions are as follows:

	July 1, 2023		December 31, 2022		Affected Line Item in the Unaudited Condensed Consolidated Balance Sheets
	(in thousands)
Prepaid income tax	$	87,718	$	88,550	Other current assets
Accrued income taxes	44,813		39,854		Other current liabilities

The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2019.

The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, the U.K., Germany, and India. The Company does not anticipate resolution of these audits will have a material impact on its consolidated financial statements.