INCOME TAXES |
3 Months Ended |
|---|---|
Jul. 03, 2021 | |
| Income Tax Disclosure [Abstract] | 听 |
| INCOME TAXES | INCOME TAXES
The effective income tax rate for the three months ended June 2021 was 14.1% compared to 11.2% in the 2020 period. The three months ended June 2021 included a net discrete tax benefit of $2.3 million, which included a $1.2 million net tax expense related to unrecognized tax benefits and interest, a $1.1 million tax benefit related to stock compensation, and a $2.4 million net tax benefit related to tax rate change on deferred tax items. Excluding the $2.3 million net discrete tax benefit in the 2021 period, the effective income tax rate would have been 15.3%. The three months ended June 2020 included a net discrete tax expense of $1.8 million, which primarily related to unrecognized tax benefits and interest. The $1.8 million net discrete tax expense in the 2020 period reduced the effective income tax rate by 0.6%. Without discrete items, the effective income tax rate for the three months ended June 2021 increased by 3.5% compared
with the 2020 period primarily due to losses generated in the prior year.
鲍鱼直播 files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. In the U.S., the Internal Revenue Service ("IRS") examinations for tax years through 2015 have been effectively settled. The examination of Timberland鈥檚 2011 tax return is ongoing.
In addition, 鲍鱼直播 is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that 鲍鱼直播鈥檚 provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact
on 鲍鱼直播鈥檚 consolidated financial statements. Management believes that some of these audits and negotiations will conclude during the next 12 months.
鲍鱼直播 was granted a ruling which lowered the effective income tax rate on taxable earnings for years 2010 through 2014 under Belgium鈥檚 excess profit tax regime. During 2015, the European Union Commission (鈥淓U鈥) investigated and announced its decision that these rulings were illegal and ordered the tax benefits to be collected from affected companies, including 鲍鱼直播. Requests for annulment were filed by Belgium and 鲍鱼直播 Europe BVBA individually. During 2017 and 2018, 鲍鱼直播 Europe BVBA was assessed and paid 鈧35.0 million tax and interest, which was recorded as an income tax receivable based on the expected success of the requests for annulment. During 2019, the General
Court annulled the EU decision and the EU subsequently appealed the General Court鈥檚 annulment. Both requests remain open and unresolved. If this matter is adversely resolved, these amounts will not be collected by 鲍鱼直播.
During the three months ended June 2021, the amount of net unrecognized tax benefits and associated interest increased by $5.9 million to $196.1 million. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $34.6 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, of which $12.1 million would reduce income tax expense.
|