XML 30 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
 
On December 22, 2017, the United States enacted significant changes to U.S. tax law following the passage and signing of the Tax Cuts and Jobs Act (the "Tax Reform Act"). The Company has followed guidance in Staff Accounting Bulletin No.118 ("SAB 118"), which provides a measurement period, not to exceed one year from the enactment of the Tax Reform Act, and recorded provisional items related to the one-time mandatory repatriation of foreign earnings and the revaluation of deferred tax assets and liabilities for the year ended December 31, 2017. For the quarter ended September 30, 2018, the Company continued to perform analysis and evaluate interpretations and additional regulatory guidance. As a result of this analysis, the Company recorded an expense to adjust the provisional one-time mandatory repatriation of foreign earnings tax of $0.7 million during the third quarter of 2018. All items related to tax reform remain provisional and no items were deemed complete.

The Company’s effective tax rate was 25.1% and 24.2% for the quarters ended September 30, 2018 and 2017, respectively, and 17.5% and 24% for the nine months ended September 30, 2018 and 2017, respectively. The Company's effective tax rate for the three months ended September 30, 2018 was primarily driven by the reduction of the U.S. corporate tax rate from 35% to 21% under the Tax Reform Act and a tax benefit from a valuation allowance release, partially offset by the adjustment to the provisional one-time mandatory repatriation of foreign earnings tax and non-deductible transaction costs as a result of the Interface Performance Materials acquisition. The Company's effective tax rate for the quarter ended September 30, 2017 was primarily driven by a net tax benefit of $1.4 million from the completion of a tax audit in the third quarter of 2017. The decrease in the Company's effective tax rate for the nine months ended September 30, 2018 compared to September 30, 2017 was primarily related to the reduction of the U.S. corporate tax rate from 35% to 21% under the Tax Reform Act, offset by the adjustment to the provisional one-time mandatory repatriation of foreign earnings tax of $0.7 million, lower tax benefits from stock vesting and the absence a net tax benefit of $1.4 million from the completion of a tax audit in the third quarter of 2017.

The Company and its subsidiaries file a consolidated federal income tax return, as well as returns required by various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including such major jurisdictions as the United States, France, Germany, China, the United Kingdom, Canada and the Netherlands. With few exceptions, the Company is no longer subject to U.S. federal examinations for years before 2015, state and local examinations for years before 2013, and non-U.S. income tax examinations for years before 2003.
The Company’s effective tax rates in future periods could be affected by an increase or decrease in earnings in countries where tax rates differ from the United States federal tax rate, the relative impact of permanent tax adjustments on earnings from domestic operations, changes in net deferred tax asset valuation allowances, stock vesting, the completion of acquisitions or divestitures, changes in tax rates or tax laws and the completion of tax projects and audits.