Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized, and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period as discrete items. Valuation allowances are provided against the future tax benefits that arise from the losses in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

The development of deferred tax assets and liabilities relates to changes in temporary differences and tax loss carry forwards. Income tax receivables decreased from $17.9 million at December 31, 2019 to $7.8 million at March 31, 2020 due to tax refunds received from tax authorities. Income taxes payable increased from $14.2 million at December 31, 2019 to $14.9 million at March 31, 2020 mainly due to the current tax expense for the period ended March 31, 2020, less payments to the tax authorities.

Income tax expense for the three months ended March 31, 2020 amounted to $7.6 million compared to $9.4 million for the three months ended March 31, 2019, reflecting profit in these periods.

For the three months ended March 31, 2020, the impact of discrete tax items included a net discrete tax gain of $0.7 million and is primarily due to the refund of prior year taxes in connection with the land sale in South Korea during 2018, offset by the unfavorable deferred tax expense of $0.8 million due to the revaluation of the realizability of deferred tax assets. Therefore, the effective tax rate of 29.75% for the three months ended March 31, 2020 deviated from the estimated annual tax rate of 29.19% for 2020.

For the three months ended March 31, 2019, the impact of discrete tax items included a net discrete tax expense of $0.9 million and is primarily due to various provision adjustments related to tax return filings. Therefore the effective tax rate of 33.40%for the three months ended March 31, 2019 deviated from the estimated annual tax rate of 30.1% for 2019.