Income Tax Provision

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Provision

NOTE 5 – Income Tax Provision

              Income tax expense for the three and six months ended June 30, 2016 was $2.4 million and $1.8 million, respectively.  Income tax expense for the three and six months ended June 30, 2015 was $5.4 million and $9.6 million, respectively, resulting in an effective income tax rate of 27.3% for the six months ended June 30, 2016, compared to 25.8% for the same period last year. The effective tax rate for the six months ended June 30, 2016 includes an immaterial benefit for various discrete items.  The Company’s effective tax rates for the three months ended June 30, 2016 and 2015 were lower than the U.S. statutory rate of 35%, principally from the impact of income from lower-taxed jurisdictions.

For the six months ended June 30, 2016, the Company reported domestic and foreign pre-tax (loss)/income of approximately $(4.6) million and $11.4 million, respectively. Funds repatriated from foreign subsidiaries to the U.S. may be subject to federal and state income taxes. The Company intends to permanently reinvest overseas all of its earnings from its foreign subsidiaries, except to the extent such undistributed earnings have previously been subject to US tax; accordingly, deferred U.S. taxes are not recorded on undistributed foreign earnings.

The impact of tax holidays decreased our tax expense by approximately $2.1 million for the six months ended June 30, 2016 and $2.0 million for the six months ended June 30, 2015. The benefit of the tax holidays on both basic and diluted earnings per share for both the six months ended June 30, 2016 and 2015 was approximately $0.04.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for tax years before 2007, or for the 2010 tax year.  The Company is no longer subject to China income tax examinations by tax authorities for tax years before 2005. With respect to state and local jurisdictions and countries outside of the U.S. (other than China), with limited exceptions, the Company is no longer subject to income tax audits for years before 2006. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties, if any, have been provided for in the Company’s reserve for any adjustments that may result from tax audits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense. As of June 30, 2016, the gross amount of unrecognized tax benefits was approximately $27.8 million.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months. At this time, an estimate of the range of the reasonably possible outcomes cannot be made.