Income Taxes

9 Months Ended

Sep. 28, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the third quarter of 2019 was 19 percent compared with 12 percent for the same period last year.  The items impacting the effective tax rate for the third quarter of 2019 were primarily attributable to benefits of $1.0 million related to the one-time transition tax on the accumulated earnings of certain foreign subsidiaries and $0.8 million related to other items. These were partially offset by the provision for state income taxes, net of the federal benefit, of $1.0 million.

The Company’s effective tax rate for the third quarter of 2018 was 12 percent. The items impacting the effective tax rate for the third quarter of 2018 were primarily attributable to a reduction of $4.3 million, or seven cents per diluted share, related to the provisional transition tax calculation and the reduction for the impact of tax benefits from losses on investments in unconsolidated

affiliates of $0.7 million. These were partially offset by the provision for state income taxes, net of the federal benefit, of $0.7 million, an increase in valuation allowance of $1.5 million, or three cents per diluted share, and $0.5 million of other items.

The Company’s effective tax rate for the first nine months of 2019 was 22 percent compared with 20 percent for the same period last year. The items impacting the effective tax rate for the first nine months of 2019 were primarily attributable to the provision for state income taxes, net of the federal benefit, of $3.3 million, which was partially offset by the recognition of a $1.6 million benefit related to an increased tax loss on the sale of a foreign subsidiary in a prior period, a reduction of $0.6 million related to the one-time transition tax on the accumulated earnings of certain foreign subsidiaries, and $0.3 million of other items.

The Company’s effective tax rate for the first nine months of 2018 was 20 percent. The items impacting the effective tax rate for the first nine months of 2018 were primarily attributable to a reduction of $4.3 million, or seven cents per diluted share, related to the provisional transition tax calculation and a reduction for the impact of tax benefits from losses on investments in unconsolidated affiliates of $4.4 million. These were partially offset by the provision for state income taxes, net of the federal benefit, of $3.3 million, an increase in valuation allowance of $1.5 million, or three cents per diluted share, the effect of foreign tax rates lower than statutory tax rates of $0.8 million, the inclusion for global intangible low-taxed income of $0.8 million, and $1.2 million of other items.

The Company files a consolidated U.S. federal income tax return and numerous consolidated and separate-company income tax returns in many state, local, and foreign jurisdictions.  The statute of limitations is open for the Company’s federal tax return and most state income tax returns for 2015 and all subsequent years and is open for certain state and foreign returns for earlier tax years due to ongoing audits and differing statute periods.  The Internal Revenue Service is currently auditing the Company’s 2015 and 2017 federal consolidated returns. While the Company believes that it is adequately reserved for possible future audit adjustments, the final resolution of these examinations cannot be determined with certainty and could result in final settlements that differ from current estimates.