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Income Taxes
9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes was $14.3 million for the three months ended September 30, 2016 compared to $21.4 million in the three months ended September 30, 2015. The effective income tax rate was 31.9% for the three months ended September 30, 2016 and 41.4% for the same period in 2015. The quarter-over-quarter decrease in the effective income tax rate was primarily attributable to the early adoption of ASU No. 2016-09, an estimated greater percentage of 2016 pretax income being earned in lower tax countries, and an increase in federal R&D credits partially offset by increases in non-deductible expenses relating to acquisitions.

The provision for income taxes was $55.1 million for the nine months ended September 30, 2016 compared to $65.7 million in the nine months ended September 30, 2015. The effective income tax rate was 30.3% for the nine months ended September 30, 2016 and 37.4% for the same period in 2015. The decrease in the effective income tax rate for the nine months ended September 30, 2016 was primarily attributable to the same factors as the quarter-over-quarter results.

As disclosed in Note 1 — Business and Basis of Presentation, the Company adopted FASB ASU No. 2016-09 in the third quarter of 2016. The effect of the adoption reduced the provision for income taxes by $0.5 million and $9.0 million for the three and nine months ended September 30, 2016, respectively.

As of September 30, 2016 and December 31, 2015, the Company had gross unrecognized tax benefits of $31.8 million and $25.9 million, respectively. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $2.5 million within the next 12 months, due to the anticipated closure of audits and the expiration of certain statutes of limitation.

In July 2015, the United States Tax Court (the “Court”) issued an opinion relating to the treatment of stock-based compensation expense in an inter-company cost-sharing arrangement. In its opinion, the Court held that affiliated companies may exclude stock-based compensation expense from their cost-sharing arrangement. The Internal Revenue Service is appealing the decision. Because of uncertainty related to the final resolution of this litigation and the recognition of potential benefits to the Company, the Company has not recorded any financial benefit associated with this decision. The Company will monitor developments related to this case and the potential impact of those developments on the Company’s consolidated financial statements.