Income Taxes

3 Months Ended

Mar. 31, 2019

15.

INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2019 and 2018 was 19.6% and 21.9%, respectively, which resulted in expense of $7.7 million and $10.4 million, respectively. The decrease of 2.3% in the effective tax rate was primarily due to a current year increase in excess tax benefits from the exercise of share-based payments

against lower year-over-year income before taxes.

During the three months ended March 31, 2019 and 2018, the Company realized $2.3 million and $1.7 million, respectively, of excess tax benefits from stock-based awards and recorded a corresponding benefit to income tax expense.

The Company analyzes its deferred tax assets each reporting period, considering all available positive and negative evidence in determining the expected realization of those deferred tax assets. As of March 31, 2019, the Company maintains a valuation allowance of $3.0 million against deferred tax assets primarily related to state tax credits it estimates will expire before they are realized.

The Company operates in multiple tax jurisdictions and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities, and the Company accrues a liability when it believes that it is more likely than not that benefits of tax positions will not be realized. The Company believes that adequate provisions have been made for all tax returns subject to examination. As of March 31, 2019, for certain tax jurisdictions tax years 2015 through 2018 remain subject to examination. Sales made to foreign distributors are not taxable in any foreign jurisdiction as the Company does not have a taxable presence in any foreign jurisdiction.