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Income Taxes
 6 Months Ended
Jul. 03, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
A summary of the provision for income taxes and the corresponding effective tax rate for the six months ended July 3, 2021 and July 4, 2020, is shown below (in millions, except effective tax rates):
Three Months EndedSix Months Ended
July 3,
2021		July 4,
2020		July 3,
2021		July 4,
2020
Provision (benefit) for income taxes$39.3 $(41.0)$98.2 $(14.5)
Pretax income (loss) before equity in net income of affiliates
$229.3 $(318.3)$508.1 $(209.8)
Effective tax rate17.1 %12.9 %19.3 %6.9 %
For the six months ended July 3, 2021, 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. For the six months ended July 4, 2020, the Company utilized the discrete effective tax rate method, as allowed under ASC 740, to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. At the time, it was not possible to reliably estimate the annual effective tax rate for the year due to uncertainty created by the COVID-19 pandemic.
The Company’s provision (benefit) for income taxes is impacted by the level and mix of earnings among tax jurisdictions. Pretax income before equity in net income of affiliates was $508.1 million in the first six months of 2021, as compared to pretax losses before equity in net income of affiliates of $209.8 million in the first six months of 2020, primarily due to the COVID-19 pandemic. As a result of COVID-19-related pretax losses in many jurisdictions in 2020, an effective tax rate comparison between the first six months of 2021 and the first six months of 2020 is not meaningful.
The Company's discrete tax benefit (expense) on significant items is shown below (in millions):
Six Months Ended
July 3,
2021		July 4,
2020
Restructuring charges and various other items$13.4 $29.6 
Valuation allowances on deferred tax assets6.7 (22.0)
Release of tax reserves6.5 1.3 
Favorable indirect tax ruling in a foreign jurisdiction(16.0)— 
$10.6 $8.9 
Excluding the items above, the effective tax rate for the first six months of 2021 and 2020 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.
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 9, "Income Taxes," to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.