Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

Income Taxes

The effective tax rate on the loss from continuing operations was (17.2) percent for the three months ended September 30, 2019 and (50.8) percent for the nine months ended September 30, 2019. The expense on the loss was primarily due to the tax impacts of the U.S. Tax Cuts and Jobs Act (Tax Act) on the estimated projected tax rate, more specifically, the impacts related to global intangible low-taxed income (GILTI) and the base erosion and anti-abuse tax (BEAT). In addition, during the first quarter the

Company collapse of the Barbados structure to meet the covenant requirements under its credit agreement, which resulted in additional discrete tax expense of $48.4 inclusive of the offsetting valuation allowance release relating to the Company’s nondeductible interest expense that was carried forward from December 31, 2018. No taxes are currently payable related to the collapsed Barbados structure. The above items noted, as well as the Company’s jurisdictional income (loss) mix and varying statutory rates, are the primary drivers of the estimated projected tax rate.

The Company’s actual effective tax rate for the three and nine months ended September 30, 2019 included the U.S. federal tax effects attributable to tax provision to return adjustments related to the Company’s 2018 U.S. federal tax return and the amendment of the 2015 U.S. federal return. As of September 30, 2019, the Company has not completed the 2018 U.S. federal tax return filing. However, upon further analysis of certain aspects of the Tax Act and refinements to the Company’s calculations, the Company recognized a tax expense of $6.4 related to the 2018 tax year. Additionally, during the third quarter of 2019, the Company amended its 2015 U.S. federal tax return and recognized tax expense of $2.8 related to the reduction of various foreign tax credit carryforwards. Both increases to U.S. federal tax expense have been reported as discrete items for the period ended September 30, 2019. The Company will finalize its 2018 tax provision to return adjustments in the periods in which the Company files its tax returns on foreign and state jurisdictions. The final impact of the tax provision to return adjustments may differ as additional guidance and information becomes available.

Also included in tax expense is $2.3 of anticipated taxes related to the Company’s change in indefinite reinvestment assertion on undistributed earnings of a certain subsidiary.

The effective tax rate on the loss before taxes was (22.3) percent for the three months ended September 30, 2018 and (8.5) percent for the nine months ended September 30, 2018. The expense on the loss for the three and nine months ended September 30, 2018 was primarily due to a goodwill impairment charge, the impacts of the Tax Act and the higher interest expense burden resulting from the debt restructuring. More specifically, the expense on the loss reflects refinement of the transition tax, the impacts related to GILTI and the business interest deduction limitation which, as a result of the Company’s debt restructuring activities during the third quarter of 2018, required a full valuation allowance on the current year nondeductible business interest expense. In addition, the benefit on the losses for the nine months ended September 30, 2018 was reduced by the goodwill impairment charge, which for tax purposes is primarily nondeductible, of $134.4 and $83.1 incurred in the third and second quarters of 2018, respectively.