Note 15 - Income Taxes

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

15. Income Taxes

On

December 22, 2017,

the SEC issued guidance under Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

), directing taxpayers to consider the impact of the Tax Act as “provisional” when it does

not

have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. The changes in the Tax Act are broad and complex. The final impacts of the Tax Act

may

differ from the Company’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The SEC has issued rules that would allow for a measurement period of up to

one

year after the enactment date of the Tax Act to finalize the related tax impacts. The Company currently anticipates finalizing any resulting adjustments before the end of its fiscal year ending

December 29, 2018. 

The Company, based on current knowledge, estimated the impact of SAB

118

on its income tax provision for the

fifty-two

week period ended

December 30, 2017. 

The total impact was an increase to its fiscal

2017

tax expense of

$1.2

million, including

$1.0

million for a reduction in deferred tax benefit and

$0.2

million related to transition repatriation taxes. Any subsequent changes to the Company’s fiscal

2017

tax expense estimates, if any, could materially impact the Company’s fiscal

2018

tax provision. As of

June 30, 2018,

the Company is unaware of any factors or potential revisions that would materially change the Company’s estimated fiscal

2017

tax provision.

The projected fiscal

2018

effective income tax rates as of

June 30, 2018

for the

twenty-six

week period ended

June 30, 2018

are approximately

28.3%,

26.5%

and

17.3%

in the United States, Canada and Serbia, respectively, and yielded a consolidated effective income tax rate of approximately

25.2%

for the

twenty-six

week period ended

June 30, 2018. 

The comparable prior year period estimated income tax rates were

41.6%

and

26.5%

in the United States and Canada, respectively, and yielded a consolidated effective income tax rate of approximately

37.9%

for the

twenty-six

week period ended

July 1, 2017. 

The Company did

not

have Serbian operations for the comparable prior year period. The significant decrease in the tax rate in the United States for the

twenty-six

week period ended

June 30, 2018

as compared to the comparable prior year period was due to the reduction in the Company’s federal income tax rate to

21.0%

from

34.0%

as provided for in the Tax Cuts and Jobs Act. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company.