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Income Taxes
3 Months Ended
Mar. 26, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
The Company’s overall effective tax rate for the three months ended March 26, 2016 and March 28, 2015 was 27.1% and 1.0%, respectively. For the three months ended March 26, 2016, the increase was primarily attributable to a benefit recorded during the three months ended March 28, 2015 for a reduction in unrecognized tax benefits and related interest of $10.4 million due to the expiration of the statute of limitations associated with pre-acquisition tax positions on forgiveness of debt, as well as the accrual of withholding taxes recorded during the three months ended March 26, 2016 in order to access cash from the Company’s Canadian and Chinese operations for use outside of the U.S. as a result of the reinstatement of the controlled foreign corporation look-through rules during the three months ended December 26, 2015.
During the three months ended March 26, 2016, the Company’s unrecognized tax benefits increased by $0.1 million to $23.4 million, primarily due to an additional quarter of Canadian Scientific Research and Experimental Development credit reserves offset by favorable foreign exchange movement. The amount of unrecognized income tax benefits that would impact the effective tax rate remained constant at $20.1 million. The amount of accrued interest on unrecognized tax benefits was $1.1 million at March 26, 2016. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by up to $3.1 million over the next twelve-month period, primarily as a result of the outcome of a pending tax ruling and competent authority ruling.
The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits in jurisdictions including the U.S., U.K., China, Japan, France, Germany and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2012.
The Company and certain of its subsidiaries have ongoing tax controversies with various tax authorities in the U.S., Canada, China and France. The Company does not believe that resolution of these controversies will have a material impact on its financial position or results of operations.
In accordance with the Company’s policy, the remaining undistributed earnings of its non-U.S. subsidiaries remain indefinitely reinvested as of the end of the three months ended March 26, 2016 as they are required to fund needs outside the U.S. and cannot be repatriated in a manner that is substantially tax free.
Income tax expense related to change in unrecognized pension gains, losses and prior service costs was $0.1 million and $0.2 million for the three months ended March 26, 2016 and March 28, 2015, respectively.