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INCOME TAXES | 9 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESIncome tax expense for the three months ended September 30, 2019, was $0.3 million, or 0.1% of income before taxes, compared with $43.4 million, or 12.9% of income before taxes, for the three months ended September 30, 2018. Income tax expense for the nine months ended September 30, 2019, was $51.4 million, or 4.8% of income before taxes, compared with $87.0 million, or 9.4% of income before taxes, for the nine months ended September 30, 2018. The effective tax rates for the three and nine months ended September 30, 2019, differed from the U.S. federal statutory rate of 21% primarily due to the tax benefit from the re-measurement of our Swiss deferred tax assets (discussed below), excess tax benefits associated with employee equity plans, the effect of income earned by certain overseas entities being taxed at rates lower than the federal statutory rate, releases of previously unrecognized tax benefits as a result of the expiration of the statute of limitations in various jurisdictions, and the federal research and development (“R&D”) credit benefit, partially offset by state income taxes (net of federal benefit) and U.S. tax on foreign earnings. The lower effective tax rates for the three and nine months ended September 30, 2019, compared with the same periods of 2018, were primarily due to the tax benefit from the re-measurement of our Swiss deferred tax assets. In August 2019, Swiss tax reform was enacted, which results in a higher statutory tax rate for our Swiss entity for years after 2019. Under U.S. GAAP, changes in tax rates and tax law are accounted for in the period of enactment, and deferred tax assets and liabilities are measured at the enacted tax rate. The impact of the re-measurement of our Swiss deferred tax assets was a benefit of $51.3 million, which reduced our effective tax rate for the three and nine months ended September 30, 2019 by 12.9 and 4.8 percentage points, respectively. As of September 30, 2019, the Company had gross unrecognized tax benefits of $86.2 million compared with $78.8 million as of December 31, 2018. The net increase is the effect of increases for the first nine months of 2019, partially offset by releases of previously unrecognized tax benefits as a result of the expiration of the statute of limitations in various jurisdictions and an audit conclusion. If recognized, the gross unrecognized tax benefits would reduce the effective tax rate in the period of recognition. In July 2015, a U.S. Tax Court opinion (the “2015 Opinion”) was issued involving an independent third party related to intercompany charges for share-based compensation. Based on the findings of the U.S. Tax Court, the Company was required to, and did, refund to its foreign subsidiaries the share-based compensation element of certain intercompany charges made in prior periods. Starting from 2015, share-based compensation has been excluded from intercompany charges. In June 2019, the Ninth Circuit Court of Appeals reversed the 2015 Opinion (the “Ninth Circuit Opinion”). Since the Ninth Circuit Opinion potentially is subject to further judicial review, the Company continues to treat its share-based compensation expense in accordance with the 2015 Opinion and continues to recognize the related tax benefits in its financial statements based upon its evaluation of the position in light of the present facts. In the event of a final opinion which reverses the 2015 Opinion, there may be an adverse impact to the Company’s income tax expense and effective tax rate. The Company files federal, state, and foreign income tax returns in many U.S. and OUS jurisdictions. Years before 2016 are closed for the significant jurisdictions. Certain of the Company’s unrecognized tax benefits could change due to activities of various tax authorities, including potential assessment of additional tax, possible settlement of audits, or through normal expiration of various statutes of limitations, which could affect the Company’s effective tax rate in the period in which they change. Due to the uncertainty related to the timing and potential outcome of audits, the Company cannot estimate the range of reasonably possible change in unrecognized tax benefits that may occur in the next 12 months. The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. The outcome of these audits cannot be predicted with certainty. The Company’s management regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of the Company’s provision for income taxes. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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