Income Taxes

6 Months Ended

Apr. 04, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense for the three and six months ended April 4, 2020 was $1.2 million and $4.4 million, respectively, compared to $3.9 million and $15.8 million for the three and six months ended March 30, 2019, respectively.

The effective tax rate for the three and six months ended April 4, 2020 was 8.2% and 9.1%, respectively, compared to the effective tax rates of 13.7% and 25.2% for the three and six months ended March 30, 2019, respectively. The effective tax rate for the three and six months ended April 4, 2020 decreased from the effective tax rate for the three and six months ended March 30, 2019, primarily due to the geographic distribution of pre-tax book income, the additional impact of the U.S. Tax Cuts & Jobs Act of $7.0 million recorded during the three months ended December 29, 2018, the $0.6 million tax benefit related to restructuring recorded during the three months ended April 4, 2020 and the $0.8 million benefit for special tax items recorded during the three months ended January 4, 2020. The $0.8 million benefit during the three months ended January 4, 2020 was comprised of a $1.9 million benefit related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits partially offset by $1.1 million of special tax items.

The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020. The Company does not expect a material impact from the law.

There were no material additions to the amount of unrecognized tax benefits recorded for uncertain tax positions as of April 4, 2020. The Company recognizes accrued interest and penalties on uncertain tax positions as a component of income tax expense. The amount of interest and penalties recorded for the three and six months ended April 4, 2020 was not material.

One or more uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows. The Company is not currently under examination by taxing authorities in the U.S. The Company is under audit in various foreign jurisdictions but settlement is not expected to have a material impact.

The Company maintains valuation allowances when it is more likely than not that all or a portion of a net deferred tax asset will not be realized. During the three months ended April 4, 2020, the Company continued to record a full valuation allowance against its net deferred tax assets in certain jurisdictions within the EMEA segment and a partial valuation against its net deferred tax assets in certain jurisdictions within the AMER segment, as it was more likely than not that these assets would not be fully realized based primarily on historical performance. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions going forward until it determines it is more likely than not that the deferred tax assets will be realized.