Income Taxes (Notes)

6 Months Ended

Jun. 29, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company maintains management and operational activities in overseas subsidiaries, and its foreign earnings are taxed at rates that are different than the U.S. federal statutory income tax rate. A significant amount of the Company’s earnings are generated by its Canadian, European and Asian subsidiaries and, to a lesser extent, in jurisdictions that are not subject to income tax.

The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has therefore not established a deferred tax liability on that amount of foreign unremitted earnings. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation.

The Company’s effective tax rates for the quarter and year-to-date ended June 29, 2024 were 13.1% and 47.8%, respectively. The Company’s effective tax rates for the quarter and year-to-date ended July 1, 2023 were 19.8% and 27.8%, respectively. The decrease in the effective tax rate between 2024 and 2023 for the quarter-to-date period is due to an increase in discrete tax benefits recognized in the current year, as well as lower pretax income, which increases the impact of the discrete benefits on the effective tax rate. The increase in the effective tax rate between 2024 and 2023 for the year-to-date period is driven by lower pretax income in the current year, which increases the impact of the discrete tax expenses on the effective tax rate.

The Company is subject to periodic audits by U.S. federal, state, local and non-U.S. tax authorities. Currently, the Company is undergoing routine periodic audits in both U.S. federal, state, local and non-U.S. tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits; however, any payment of tax is not expected to be significant to the consolidated condensed financial statements. The Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2020 in the majority of tax jurisdictions.