Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three month period ended September 30, 2019, the Company recorded a provision for income taxes of $7,721 (effective tax rate of 21.0 percent) compared to $16,227 (effective tax rate of 22.6 percent) for the same period in 2018. For the nine month period ended September 30, 2019, the Company recorded a provision for income taxes of $19,908 (effective tax rate of 30.5 percent) compared to $21,944 (effective tax rate of 21.5 percent) for the same period in 2018. The 2019 and 2018 three and nine month period provisions for income taxes are calculated using a forecasted multi-jurisdictional annual effective tax rate to determine a blended annual effective tax rate. The Company is subjected to the U.S. federal statutory rate of 21 percent. The effective tax rate for the three and nine month periods ended September 30, 2019 were affected by net discrete tax (benefit) expense of $(1,863) and $2,522 recorded during the three and nine month periods, respectively, and by the projected mix of earnings in international jurisdictions with differing tax rates and jurisdictions where valuation allowances are recorded. The discrete tax items in the three month period ended September 30, 2019, consist of state refund filings and other state activity of $(971) as well as U.S. Federal tax benefit based on return to provision adjustments related to tax reform items and certain tax credits of $(892). The discrete tax items in the nine month period ended September 30, 2019 primarily consist of various state reserves for additional uncertain tax positions of $4,939 offset by return to provision adjustments of $(1,347) and expected refunds and deferred tax benefits related to other state filings of $(3,858). For the nine month period ended September 30, 2019, discrete items also include 2017 transition tax and unrecognized tax benefits accrued of $1,661 and $670, respectively, as a result of final U.S. federal tax guidance issued during the first quarter of 2019 pertaining to the one-time mandatory deemed repatriation under the 2017 Tax Act.

The Company continues to maintain valuation allowances pursuant to ASC 740, “Accounting for Income Taxes,” against portions of its U.S. and non-U.S. deferred tax assets at September 30, 2019 as it cannot assure the future realization of the associated tax benefits prior to their reversal or expiration. In the U.S., the Company has offset a portion of its deferred tax asset relating primarily to a loss carryforward by a valuation allowance of $1,402. In addition, the Company has recorded valuation allowances of $21,687 relating to non-U.S. net operating losses and other deferred tax assets for a total valuation allowance of $23,089. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company will continue to reassess the possibility of releasing all or part of the valuation allowances currently in place when the associated deferred tax assets are deemed to be realizable. If the evidence suggests that deferred tax assets for these operations will more likely than not be able to be realized in the future, release of a portion or all of the valuation allowance in place for these entities could occur. Such release could materially impact the Company's effective tax rate in the period in which the release occurs.

The Company maintains an ASC 740-10, “Accounting for Uncertainty in Income Taxes,” liability for unrecognized tax benefits. At September 30, 2019, the Company’s liability, exclusive of penalty and interest, totals approximately $10,957. The Company reversed an immaterial amount of its state unrecognized tax benefits, primarily as a result of exam settlement, and accrued an immaterial amount of interest expense during the nine month period ended September 30, 2019. Based upon the outcome of tax examinations, judicial proceedings, or expiration of statutes of limitations, it is possible that the ultimate resolution of the Company's unrecognized tax benefits may result in a payment that is materially different from the current estimate of the tax liabilities.

The Company operates in multiple jurisdictions throughout the world. The Company has effectively settled U.S. federal tax examinations for tax years before 2016 and state and local examinations for tax years before 2013, with limited exceptions. Furthermore, the Company’s non-U.S. subsidiaries are generally no longer subject to income tax examinations in major foreign taxing jurisdictions for tax years prior to 2014. Certain of the Company's state income tax returns in various jurisdictions are currently under examination and it is possible that these examinations will conclude within the next twelve months. However, it is not possible to estimate net increases or decreases in the Company’s unrecognized tax benefits during the next twelve months.