Income Taxes

9 Months Ended

Mar. 28, 2020

Income Tax Disclosure [Abstract]

Income Taxes [Text Block]

INCOME TAXES

In the three and nine months ended March 28, 2020 the Company recorded an income tax provision of $20.5 million and $61.2 million, respectively, compared to $29.8 million and $116.8 million for the three and nine months ended March 30, 2019, respectively. The Company’s effective tax rate for the three and nine months ended March 28, 2020 was 11.3% and 12.0%, respectively, compared to 18.6% and 20.3% for the three and nine months ended March 30, 2019, respectively.

On December 22, 2017 legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), was enacted. The Act included a one-time tax on accumulated unremitted earnings of the Company's foreign subsidiaries (“Transition Tax”). SEC Staff Accounting Bulletin No. 118 allowed the use of provisional amounts (reasonable estimates) if accounting for the income tax effects of the Act was not completed. Provisional amounts must be adjusted within a one-year measurement period from the enactment date of the Act. In the second quarter of fiscal year 2018, the Company recorded a discrete $236.9 million provisional Transition Tax charge. During the measurement period, the Company gathered additional information and analyzed available guidance to more precisely compute the amount of the Transition Tax. In the second quarter of fiscal year 2019, the Company completed this work and recorded a discrete $22.1 million measurement period adjustment for the Transition Tax, which increased the Company’s effective tax rate for the nine months ended March 30, 2019 by 3.8%. As of the end of the second quarter of fiscal year 2019, the accounting for income tax effects of the Act was completed.

The Company’s federal statutory tax rate is 21%. The Company’s effective tax rate for the three and nine months ended March 28, 2020 was lower than the statutory rate primarily due to earnings of foreign subsidiaries, generated by the Company's international operations managed in Ireland, that were taxed at lower rates, partially offset by U.S. tax expense related to Global Intangible Low-Taxed Income (“GILTI”).

The Company’s effective tax rate for the three months ended March 30, 2019 was lower than the statutory rate primarily due to earnings of foreign subsidiaries, generated by the Company's international operations managed in Ireland, that were taxed at lower rates, partially offset by tax generated by the GILTI provisions, a $4.1 million discrete charge for differences between the Company's fiscal year 2018 tax returns and the tax provision originally recorded, and $5.7 million of discrete interest accruals for unrecognized tax benefits.

The Company’s effective tax rate for the nine months ended March 30, 2019 was lower than the statutory rate primarily due to earnings of foreign subsidiaries, generated by the Company's international operations managed in Ireland, that were taxed at lower rates, partially offset by a $21.0 million discrete charge for the Transition Tax, tax generated by the GILTI provisions, $15.1 million of discrete interest accruals for unrecognized tax benefits, and $4.8 million of discrete charges for differences between the Company's fiscal year 2018 tax returns and the tax provision originally recorded.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that the balance of gross unrecognized tax benefits, including accrued interest and penalties, could decrease up to $57.0 million within the next twelve months due to the completion of federal tax audits, including any administrative appeals. The $57.0 million primarily relates to matters involving federal taxation of cross-border transactions.

The Company’s federal corporate income tax returns are audited on a recurring basis by the Internal Revenue Service (“IRS”). In fiscal year 2017, the IRS commenced an audit of the Company’s federal corporate income tax returns for fiscal years 2012 through 2014, which is ongoing. In fiscal year 2020 the IRS commenced an audit of the Company's federal corporate income tax returns for fiscal years 2015 through 2017, which is ongoing.