INCOME TAXES

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our quarterly income tax provision is calculated using an estimated annual effective income tax approach. The quarterly effective tax rate can differ from our estimated annual effective tax rate as the Company cannot apply an effective tax rate approach for all of its operations. For those entities that can apply an effective tax rate approach, as of March 31, 2019, our annual effective tax rate, excluding discrete items, is 24.3% for 2019, as compared to 26.5% as of March 31, 2018. The remaining entities, which are operations that generate pre-tax losses which cannot be tax benefited and/or have an effective tax rate which cannot be reliably estimated, have to account for their income taxes on a discrete year-to-date basis as of the end of each quarter and are excluded from the effective tax rate approach.

The estimated annual effective tax rate for 2019 also excludes the unfavorable impact of withholding taxes associated with certain intercompany payments, including royalties, service charges, interest and dividends, which in the aggregate are relatively consistent each year due to the need to repatriate funds to cover U.S. and U.K.-based costs, such as interest on debt and corporate overhead. Withholding taxes are accounted for discretely and accrued in the provision for income taxes as they become due.

The provision for income taxes for the three months ended March 31, 2019 and 2018 was $19.5 and $31.5, respectively. Our effective tax rates for the three months ended March 31, 2019 and 2018 were (433.3)% and 302.9%, respectively. The effective tax rate in the first quarter of 2019 was also favorably impacted by the accrual of income tax benefits of approximately $3.5 associated with the release of income tax reserves of approximately $3.7 associated with our uncertain tax positions net of other miscellaneous income tax expenses of approximately $0.2. The effective tax rate in the first quarter of 2018 was also unfavorably impacted by one-time income tax reserves of $9.2 associated with our uncertain tax positions net of other miscellaneous income tax benefits of approximately $1.2.

In its final analysis of the impacts of the Tax Cuts and Job Act (the "Act") during the fourth quarter of 2018, the Company elected to treat income taxes associated with Global Intangible Low-Taxed Income ("GILTI"), as a period cost. As a result, the first-quarter 2019 provision for income taxes reflects this treatment. The first-quarter 2018 provision for income taxes has also been calculated treating GILTI as a period cost. For both periods, GILTI did not have a material effect. The Act has significant complexity. The Company has considered the published guidance provided by the various Federal and state regulatory authorities into the calculation of its income tax provisions available as of March 31, 2019 and March 31, 2018 for the respective quarters ended March 31, 2019 and March 31, 2018.

In prior years, we had previously recorded valuation allowances against certain deferred tax assets associated with the U.S. and foreign jurisdictions. We intend to continue maintaining these valuation allowances on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.