Income Taxes

3 Months Ended

Mar. 31, 2019

Our income tax provision for the periods presented and the respective effective income tax rates for such periods are as follows (in millions, except for income tax rates):



	For the Three Months Ended
	March 31,
	2019			2018
Income tax provision	$	14.0		$	7.3

Effective income tax rate	27.3		%	19.0		%

Our provision for income taxes for the three months ended March 31, 2019 was $14.0 million, resulting in an effective income tax rate of 27.3%. The provision includes a $3.2 million discrete tax benefit that should have been recognized in a prior period

and which, together with certain other discrete tax items, resulted in a net income tax benefit of $2.8 million for the period. Without the $2.8 million in discrete items, the effective income tax rate would have been 32.8% for the three months ended March 31, 2019. See Note 1 - Basis of Presentation and Significant Accounting Policies for additional information.

Our provision for income taxes for the three months ended March 31, 2018 was $7.3 million resulting in an effective tax rate of 19%. Our provision for income taxes was adjusted for an income tax benefit of $4.9 million, net, for discrete items related to changes in estimates in uncertain tax positions, an adjustment for stock-based compensation, and changes in the valuation allowance in various jurisdictions. Without the $4.9 million in discrete items, the effective income tax rate would have been 31.7% for the three months ended March 31, 2018.

Our provision for income taxes for the three months ended March 31, 2019 and 2018 was calculated based on the estimated annual effective income tax rate for the 2019 and 2018 fiscal years. The actual effective income tax rate for the 2019 fiscal year may be materially different as a result of differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned.

We have various income tax returns under examination both in the U.S. and foreign jurisdictions. The most significant of these are in South Korea for the 2011 to 2014 tax years, Denmark for the 2013 to 2015 tax years and the U.S. for the 2013 to 2016 tax years. In 2016, the South Korean branch of one of our subsidiaries received income tax assessment notices for the years 2011 to 2014 totaling $9.9 million (KRW 11.3 billion). We believe that these assessments are without merit and are currently appealing the actions. In addition, during the quarter ended March 31, 2018, one of our Danish subsidiaries received an audit inquiry from the Danish tax authority relating to transfer pricing and related issues for the tax years 2013 to 2015. We have been responding to the request and related questions and in April 2019, we received a proposed tax adjustment for the 2013 tax year which is not material. We believe that the proposed adjustment is without merit and intend to defend our positions. Finally, in 2017, we received a notice of examination from the U.S. Internal Revenue Service for the 2013 to 2016 tax years and we are currently responding to the request.

An unfavorable resolution of one or more of the above matters could have a material adverse effect on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process or we have not yet reached the final stages of the appeals process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.