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Income Taxes
 6 Months Ended
Jul. 03, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
7 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 were 21%, 12.5%, 19% and 17%, respectively, as of July 3, 2021. The Company ha
d
 a contractual tax rate of 0% on qualifying activities in Singapore through March 2021, based upon the achievement of certain contractual milestones. The Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. The effect of applying the concessionary income tax rates rather than the statutory tax rate to income from qualifying activities in Singapore increased the Company’s net income for the six months ended July 3, 2021 and June 27, 2020 by $9 million and $7 million, respectively, and increased the Company’s net income per diluted share by $0.14 and $0.11, respectively.
The Company’s effective tax rate for the three months ended July 3, 2021 and June 27, 2020 was 15.3% and 15.4%, respectively. The decrease in the effective income tax rate can be attributed to differences in the proportionate amounts of
pre-tax
income recognized in jurisdictions with different effective tax rates.
 
The Company’s effective tax rate for the six months ended July 3, 2021 and June 27, 2020 was 15.0% and 13.2%, respectively. The effective tax rate for the six months ended July 3, 2021 includes a $4 million tax benefit related to stock-based compensation. This income tax benefit decreased the effective tax rate by 1.1 percentage points for the six months ended July 3, 2021. The effective tax rate for the six months ended June 27, 2020 includes a $5 million income tax benefit related to certain restructuring charges and a $2 million tax benefit related to stock-based compensation. These income tax benefits decreased the effective tax rate by 2.4 percentage points and 1.2 percentage points, respectively, for the six months ended June 27, 2020. 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 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 six months ended July 3, 2021 and June 27, 2020 (in thousands):
 
    
July 3, 2021
    
June 27, 2020
  
Balance at the beginning of the period
    $ 28,666     $ 27,790  
Net reductions for settlement of tax audits
      (593 )      —    
Net reductions for lapse of statutes taken during the period
      (198 )      (252 ) 
Net additions for tax positions taken during the current period
      653       536  
    
 
 
    
 
 
  
Balance at the end of the period
    $ 28,528     $ 28,074  
    
 
 
    
 
 
  
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, 2015. 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 July 3, 2021, 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.