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Income Taxes | 3 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s effective tax rates for the three-month periods ended March 31, 2018 and April 1, 2017 were 18.0% and 500.0%, respectively. The variance from the 2018 federal statutory rate of 21% for the current period is attributable to the benefits of lower tax rates on foreign earnings, excess stock compensation benefits, return to provision adjustments, and U.S. tax credits. These benefits are partially offset by the impacts of foreign earnings taxed in the United States, the U.S. impact of the Enterprise Acquisition, and other permanent items. The decrease in the effective income tax rate for the three months ended March 31, 2018 compared with the prior year quarter is primarily the result the tax impacts of an intercompany sale of intellectual property, a rate change in Singapore, and enactment of U.S. tax reform. Pre-tax earnings outside the United States are primarily generated in the United Kingdom, Singapore, and Luxembourg, with statutory rates of 19%, 17%, and 27%, respectively. During 2017, the Company received approval from the Singapore Economic Development Board for a tax rate of 10% with the Company’s commitment to make increased investments in Singapore. The Singapore incentivized rate expires on December 31, 2018. Quarterly, Management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation allowances. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits will not be realized. The Company is currently undergoing U.S. Federal income tax audits for the years 2013 thru 2015, as well as UK income tax years 2012 and 2014. The tax years 2004 through 2016 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. The Company continues to believe its positions are supportable, however, the Company anticipates that $22 million of uncertain tax benefits may be disallowed within the next twelve months and as such, has reflected this liability as current within the Company’s Consolidated Balance Sheets. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlement of uncertain tax positions may change and the actual tax benefits may differ significantly from the estimates. Impact of U.S. Tax Reform Tax Cuts and Jobs Act (“TCJA” or “the Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Based on current operations, we estimate that the Company is subject to the Global Intangible Low-Taxed Income and the Deduction for Foreign-Derived Intangible Income provisions of the Act. We estimate that the new limitations which defer U.S. interest deductions in excess of 30% of Adjusted Taxable Income are not applicable. Additionally, the Company is no longer able to deduct performance-based compensation for its covered employees which exceeds the limitation under Internal Revenue Code Section 162(m). These impacts are included in the calculation of our annual estimated effective tax rate. At March 31, 2018, we continue to analyze the accounting for the tax effects of enactment of the Act. As described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we have not been able to make a reasonable estimate and continue to account for those items based on our existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to enactment. The Company has not recorded an adjustment to its state and local current or deferred income tax provision as a result of the Act. Guidance from state tax authorities which do not fully conform with the U.S. Internal Revenue Code is not available to allow the Company to estimate the financial statement impact at this time. Provisional amounts The Company remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the remeasurement of deferred taxes requires further analysis regarding the state tax impacts of the remeasurement, the impact of the Act on the taxation of executive compensation arrangements, changes to tax capitalization provisions and other aspects of the Act that may impact our tax balances. For the year ended December 31, 2017, the provisional adjustment related to the remeasurement of all U.S. deferred tax balances was $35 million. For the period ended March 31, 2018, the Company has made no update to this amount. At December 31, 2017, we recorded a provisional amount for the one-time transition tax liability, resulting in an increase in income tax expense of $36 million. The Company will continue to evaluate the transition charge based on guidance issued. The transition tax is based in part on the amount of those earnings held in cash and other specified assets. This calculation may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. We have reduced our deferred tax asset for income tax credits by $10 million which is available to offset the one-time transition tax, resulting in an estimated cash tax liability of $26 million, which is to be remitted over the next eight years as follows:
| One-Time Transition Tax - Payments Due for Calendar Year Tax Returns
| 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024
Unremitted Earnings Payments | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 4 |  |  | $ | 5 |  |  | $ | 7 |
The Internal Revenue Service issued Notice 2018-26 on April 2, 2018. The Company has recalculated the transition tax liability per this notice resulting in an $8 million increase to the previously reported tax expense. This additional expense will be included as a component of Income tax expense on the Consolidated Statements of Operations for the period ending June 30, 2018. The Company earns a significant amount of its operating income outside of the U.S. The Company’s policy considers its U.S. investment in directly-owned foreign affiliates to be indefinitely reinvested. Under the Act, future unremitted foreign earnings will no longer be subject to tax when repatriated to its U.S. parent, but may be subject to withholding taxes of the payor affiliate country. Additionally, gains and losses on taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. tax.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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