Income Taxes

3 Months Ended

Mar. 28, 2020

8 Income Taxes

The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates

re 21%, 12.5%, 19% and 17%, respectively, as of March 28, 2020. The Company has a contractual tax rate of 0% on qualifying activities in Singapore through March 2021, based upon the achievement of certain contractual milestones, which the Company expects to continue to meet. The effect of applying the contractual tax rate rather than the statutory tax rate to income from qualifying activities in Singapore increased the Company’s net income for the three months ended March 28, 2020 and March 30, 2019 by $2 million and $4 million, respectively, and increased the Company’s net income per diluted share by $0.04 and $0.06, respectively.

The Company’s effective tax rate for the three months ended March 28, 2020 and March 30, 2019 was 7.4% and 7.1%, respectively. The income tax provision includes a $2 million and $7 million income tax benefit related to stock-based compensation for the three months ended March 28, 2020 and March 30, 2019, respectively. The effective tax rate for the three months ended March 28, 2020 include

a $4 million income tax benefit related to certain restructuring charges. This income tax benefit decreased the effective tax rate by 7.1 percentage points for the three months ended March 28, 2020. The effective tax rate for the three months ended March 30, 2019 includes a $3 million income tax benefit related to the finalization of certain regulations relating to the Tax Cuts and Jobs Act (the “2017 Tax Act”). This income tax benefit decreased the effective tax rate by 2.9 percentage points for the three months ended March 30, 2019. The remaining differences between the effective tax rates can primarily be attributed to differences in the proportionate amounts of

pre-tax

income recognized in jurisdictions with different effective tax rates.

The Company accounts for its uncertain tax return reporting positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax reporting positions on the presumption that all concerned tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those reporting positions for the time value of money. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

The following is a summary of the activity of the Company’s gross unrecognized tax benefits, excluding interest and penalties, for the three months ended March 28, 2020 and March 30, 2019 (in thousands):


	March 28, 2020			March 30, 2019
Balance at the beginning of the period	$	27,790		$	26,108
Net reductions for lapse of statutes taken during the period		(101	)		(43	)
Net additions for tax positions taken during the current period		203			325

Balance at the end of the period	$	27,892		$	26,390

With limited exceptions, the Company is no longer subject to tax audit examinations in significant jurisdictions for the years ended on or before December 31, 2014. The Company continuously monitors the lapsing of statutes of limitations on potential tax assessments for related changes in the measurement of unrecognized tax benefits, related net interest and penalties, and deferred tax assets and liabilities. As of March 28, 2020, the Company expects to record reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of less than $1 million within the next twelve months due to potential tax audit settlements and the lapsing of statutes of limitations on potential tax assessments. The Company does not expect to record any other material reductions in the measurement of its unrecognized tax benefits within the next twelve months.