INCOME TAX EXPENSE

9 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAX EXPENSE

9. INCOME TAX EXPENSE

The third quarter 2017 effective income tax rate was 27.4% compared to 34.2% in the third quarter of 2016. The effective income tax rate for the first nine months of 2017 was 31.4% compared to 34.3% for the first nine months of 2016. The Company elected to early adopt Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, resulting in the income tax expense in the third quarter and first nine months of 2017 being favorably impacted by additional tax benefits on share-based compensation that vested during the quarter decreasing the effective tax rate by 5.1% and 1.8%, respectively.

The income tax expense in the first nine months of 2016 was unfavorably impacted by a U.K. foreign valuation allowance that increased the year-to-date effective tax rate by1.5%. The income tax expense in the third quarter and first nine months of 2016 was favorably impacted by the extension of the research credit as a result of The Protecting Americans from Tax Hikes Act reducing the year-to-date effective tax rate by 1.8%. The income tax expense in the third quarter and first nine months of 2016 was unfavorably impacted by return to provision true-ups increasing the third quarter and year-to-date effective tax rate by 1.3% and 0.5%, respectively. The income tax expense in the first nine months of 2016 was unfavorably impacted by losses in foreign jurisdictions for which no tax benefit was recorded, increasing the year-to-date effective tax rate by 1.7%.