|9 Months Ended|
Sep. 30, 2015
|Income Tax Disclosure [Abstract]|
8. Income Taxes
Income taxes were $43.9 million and $114.8 million for the three and nine months ended September 30, 2015, respectively, as compared to a benefit of $13.3 million and an expense of $76.9 million for the same periods in 2014, respectively. The effective income tax rate was 31.9% and 31.1% for the three and nine months ended September 30, 2015, respectively, as compared to 647.9% and 27.2% for the same periods in 2014, respectively. The decrease in the effective tax rate for the three months ended September 30, 2015, as compared to the same period in 2014, was due to the change in the geographic mix of the Company’s income, primarily related to the decrease in Herbalife Venezuela’s foreign exchange losses, and also due to the decrease in net benefits from discrete events. The increase in the effective tax rate for the nine months ended September 30, 2015, as compared to the same period in 2014, was primarily due to the impact of changes in the geographic mix of the Company’s income.
During the three months ended September 30, 2015, the Company utilized $240.8 million of its deferred tax asset balance relating to intercompany deferred interest expense as of December 31, 2014 and reduced its valuation allowance for the same amount, as a result of a taxable distribution of an intercompany asset between Herbalife subsidiaries that occurred during the current period. There was no net impact to the Company’s condensed consolidated balance sheet, condensed consolidated statement of income, or condensed consolidated statement of cash flows.
As of September 30, 2015, the total amount of unrecognized tax benefits, including related interest and penalties was $57.7 million. If the total amount of unrecognized tax benefits was recognized, $45.5 million of unrecognized tax benefits, $7.0 million of interest and $1.4 million of penalties would impact the effective tax rate.
The Company believes that it is reasonably possible that the amount of unrecognized tax benefits could decrease by up to approximately $12.7 million within the next twelve months. Of this possible decrease, $5.7 million would be due to the settlement of audits or resolution of administrative or judicial proceedings. The remaining possible decrease of $7.0 million would be due to the expiration of statute of limitations in various jurisdictions.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef