For the nine months ended October 3, 2020, the Company estimated its annual effective tax rate utilizing the annualized effective tax rate method under Accounting Standards Codification ("ASC") 740, "Income Taxes," to calculate its interim income tax provision. In the first and second quarters of 2020, the Company utilized the discrete effective tax rate method, as allowed under ASC 740, to calculate its interim income tax provision because it was not possible to reliably estimate the annual effective tax rate for the year due to uncertainty created by the COVID-19 pandemic.

A summary of the provision for income taxes and the corresponding effective tax rate for the three and nine months ended October 3, 2020 and September 28, 2019, is shown below (in millions, except effective tax rates):

	Three Months Ended						Nine Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Provision for income taxes	$	44.6		$	33.5		$	30.1		$	149.9
Pretax income before equity in net income of affiliates	$	235.2		$	267.0		$	25.4		$	820.8
Effective tax rate		19.0	%		12.5	%		118.5	%		18.3	%

The Company’s provision for income taxes is impacted by the level and mix of earnings among tax jurisdictions. In the first nine months of 2020, pretax income before equity in net income of affiliates was significantly lower than in the first nine months of 2019, primarily due to the COVID-19 pandemic, and as a result, relatively small changes in the provision for income taxes in 2020 can cause disproportionate changes in the effective tax rate as compared to 2019. The higher effective tax rate in the first nine months of 2020, as compared to the first nine months of 2019, was also due to the net discrete tax expense and lower tax benefit on the Company’s restructuring charges and various other items in 2020.

The Company’s discrete tax benefit (expense) on significant items is shown below (in millions):

	Nine Months Ended
	October 3, 2020			September 28, 2019
Restructuring charges and various other items	$	20.7		$	35.7
Valuation allowances on deferred tax assets		(12.2	)		(10.4	)
Share-based compensation		-			3.1
Change in tax status of certain affiliates		-			18.4
Research and development tax credits		5.0			28.6
	$	13.5		$	75.4

The Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among

jurisdictions. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for its deferred tax assets is necessary. Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a valuation allowance is recorded. If operating results improve or decline on a continual basis in a particular jurisdiction, the Company’s decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.

For further information related to the Company's income taxes, see Note 8, "Income Taxes," to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.