INCOME TAXES

The Company’s income tax expense in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual pre-tax results from ordinary operations. The annual effective income tax rate is reviewed and, if necessary, adjusted on a quarterly basis. As a result of adopting ASU 2016-09, effective January 1, 2017, all excess tax benefits and deficiencies are recognized as income tax expense in the Company’s Condensed Consolidated Statement of Operations in the reporting period in which they occur. This may result in increased volatility in the Company’s effective tax rate.

The Company’s income tax expense consisted of the following:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Income before provision for income taxes	$	26,950		$	39,023		$	70,316		$	121,119
Income tax expense using estimated annual effective income tax rate	10,331			15,306			26,961			47,474
Changes in effective tax rates	173			(1,149		)	—			—
Impact of discrete items, net	(4,032		)	(841		)	(4,444		)	(792		)
Income tax expense	$	6,472		$	13,316		$	22,517		$	46,682

The discrete items for the nine months ended September 30, 2017 are primarily related to an income tax benefit associated with a state tax credit and the windfall tax benefit from the vesting of a performance-based stock grant. The discrete items for the nine months ended September 30, 2016 are primarily related to the results of recent state income tax audits and a change in the marginal state tax rate as a result of recent state legislation changes.