Income Taxes

6 Months Ended

Jun. 30, 2019

Income Taxes

Income Taxes

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income. At June 30, 2019, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods. If necessary, the year-to-date tax benefit for interim period losses is limited to the amount that could be recognizable at the end of the fiscal year.

Loss before income taxes and income tax expense (benefit) for the three and six months ended June 30, 2019 and 2018 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
	(in thousands)
Loss before income taxes	$	(15,420)	$	(265,659)	$	(33,759)	$	(281,716)
Income tax expense (benefit)	$	145	$	(28,025)	$	336	$	(28,255)

The Company’s tax expense for the three months ended June 30, 2019 was $0.1 million, compared to a tax benefit of $28.0 million for the comparable prior period. The 2019 tax expense included a $0.1 million expense related to the Company’s domestic operations and minimal expense related to the Company’s non-U.S. operations, compared to 2018 when the benefit included a $1.3 million benefit related to the Company’s domestic operations, and a $26.7 million benefit related to the Company’s non-U.S. operations. Although there was a domestic pre-tax loss for the three months ended June 30, 2019 and 2018, the Company did not provide a current tax benefit on domestic pre-tax losses, as the amounts are not realizable on a more-likely-than-not basis. The domestic tax expense for the current period is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The non-U.S. tax expense for the three months ended June 30, 2019 is primarily attributable to tax expense on non-U.S operation profits and foreign withholding taxes on unremitted earnings as of June 30, 2019, offset by the amortization of intangible assets.

The Company’s tax expense for the six months ended June 30, 2019 was $0.3 million, compared to a tax benefit of $28.3 million for the comparable prior period. The 2019 tax expense included a $0.1 million expense related to the Company’s

domestic operations, and $0.2 million expense related to the Company’s non-U.S. operations, compared to 2018 when the benefit included a $1.2 million benefit related to the Company’s domestic operations, and a $27.1 million benefit related to the Company’s non-U.S. operations. Although there was a domestic pre-tax loss for the six months ended June 30, 2019 and 2018, the Company did not provide a current tax benefit on domestic pre-tax losses, as the amounts are not realizable on a more-likely-than-not basis. The domestic tax expense for the current period is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The non-U.S. tax expense for the six months ended June 30, 2019 is primarily attributable to tax expense on non-U.S operation profits and foreign withholding taxes on unremitted earnings as of June 30, 2019, offset by the amortization of intangible assets.

The domestic tax benefit for the three and six months ended June 30, 2018 is primarily attributable to refundable alternative minimum tax credits in accordance with the 2017 Tax Act, offset by the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The non-U.S. tax benefit for the three and six months ended June 30, 2018 is primarily attributable to the deferred tax benefit recognized on the intangible asset impairment charge incurred during the period.