
The Company’s effective tax rates from continuing operations for the three months ended June 28, 2024 and June 30, 2023 were 30.0% and 23.9%, respectively. The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21% and the Company's effective tax rate for the three-month period ended June 28, 2024 were U.S. state income tax expense of $4.4 million and U.S. tax on foreign earnings of $10.5 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested. The U.S. state income tax and U.S. tax on foreign earnings are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year. These expense items were partly offset by a return-to-provision income tax benefit of $7.9 million, mainly attributable to additional research and development credits claimed on the U.S. federal tax return. For the three months ended June 30, 2023, the main differences compared to the U.S. federal statutory rate were attributable to U.S. state income tax expense of $5.3 million and U.S. tax on foreign earnings of $5.4 million, partly offset by a $3.5 million tax benefit for the release of previously valued foreign tax credits.

The Company's effective tax rates from continuing operations for the nine months ended June 28, 2024 and June 30, 2023 were 18.7% and 18.2%, respectively. The most significant item contributing to the difference between the statutory U.S. federal corporate tax rate of 21% and the Company’s effective tax rate for the nine-month period ended June 28, 2024 is related to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S. tax purposes, with this election resulting in the derecognition of a deferred tax liability and yielding a discrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested. This benefit was partly offset by U.S. state income tax expense of $11.7 million, U.S. tax on foreign earnings of $19.1 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested. The U.S. state income tax and U.S. tax on foreign earnings are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year. For the nine months ended June 30, 2023, the main differences compared to the U.S. federal statutory rate were associated with net tax benefits of $39.4 million which were mostly related to uncertain tax positions in the U.S. that were effectively settled, of which $30.8 million related to positions carried forward from the fiscal 2018 acquisition of CH2M Hill Companies Ltd., as well as a tax benefit of $12.1 million for the release of previously valued foreign tax credits. These benefits were partly offset by U.S. state income tax expense of $15.8 million and U.S. tax on foreign earnings of $13.6 million.

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released the Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate. Several jurisdictions in which we operate have enacted these rules, which are effective for the first quarter of the fiscal year ending September 26, 2025. The Company is continually monitoring developments and evaluating the potential impacts. At this time, the Company does not anticipate a material tax charge as a result of implementation of these rules.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.