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Note 10 - Taxes on Income

9 Months Ended

Sep. 30, 2020

10.

TAXES ON INCOME

The Company’s effective tax rate in the quarter and nine-month period ended September 30, 2020 was a benefit of 10.1% and 6.5%, respectively. The effective rates for both periods were negatively impacted, as compared to U.S. federal statutory tax rates, by: (i) valuation allowances on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized; and (ii) valuation allowances related to goodwill impairments.

The Company’s effective tax rate in the quarter and nine month period ended September 30, 2019 was a benefit of 1.8% on pre-tax income and an expense of 143.3% on a pre-tax loss, respectively. The effective rate for the third quarter of 2019 was positively impacted by a $1.7 million return-to-provision true-up primarily related to foreign tax credits applied to the mandatory deemed repatriation from the Tax Cuts and Jobs Act (“TCJA”). This adjustment provided a 27.0% benefit to the effective tax rate during the third quarter of 2019. Partially offsetting this were negative impacts from: (i) significant pre-tax charges related to the release of cumulative currency translation adjustments, which were not deductible for tax purposes; and (ii) valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized. The effective rate for the nine-month period was negatively impacted by: (i) significant pre-tax charges primarily related to impairments of held for sale assets and the release of cumulative currency translation adjustments, which were not deductible for tax purposes; (ii) a $2.1 million charge for foreign withholding taxes on the repatriation of foreign earnings; and (iii) valuation allowances recorded on certain net operating losses in foreign jurisdictions for which no income tax benefits are expected to be recognized. Partially offsetting the negative factors was the $1.7 million of return-to-provision true-ups noted in the quarterly discussion above.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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