Note 12 - Income Taxes

6 Months Ended

Jul. 01, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

12–

INCOMETAXES

On

December 22, 2017,

the U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Company is continuing to evaluate the Tax Act and its requirements, as well as its application to our business and its impact on our effective tax rate.

The Company is applying the guidance to address the accounting for income taxes under accounting standards in situations when a registrant does

not

have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.  Accounting standards provide a reasonable “measurement period”

not

to exceed

twelve

months from the date of enactment to complete the accounting of these provisional estimates.  As disclosed in the Company’s Annual report on Form

10

-K for the fiscal year ended

December 31, 2017, 

two

material provisional estimates that impacted the Company were the U.S. statutory rate reduction and the

one

-time transition tax. These amounts are considered provisional because they use reasonable estimates for taxes with respect to which tax returns have

not

been filed and because estimated amounts

may

be impacted by future regulatory and accounting guidance if and when issued. 

For the

six

months ended

July 1, 2018,

there were

no

significant changes to the Company’s provisional estimates of the income tax effects reflected in

2017

for the changes in tax law and tax rate from the enactment of the Tax Act. The impact of tax law changes on the Company’s financial statements could differ from its reasonable estimates due to further analysis of the new law, regulatory guidance, technical corrections, legislation, or guidance under U.S. generally accepted accounting principles. If significant changes occur, the Company will provide updated information in connection with future regulatory filings or the Company will adjust these provisional amounts as further information becomes available and as we refine our calculations.

During the

six

months ended

July 1, 2018,

the Company’s effective tax rate was favorably impacted by the reduction in the U.S. statutory tax rate due to the enactment of the Tax Act. This favorable impact was partially offset by certain base broadening provisions of the Tax Act. For the

six

months ended

July 1, 2018,

our effective tax rate was

27%,

as compared to

33%

for the

first

six

month of

2017.

Accounting standards require that all tax positions be analyzed using a

two

-step approach. The

first

step requires an entity to determine if a tax position is more-likely-than-

not

to be sustained upon examination. In the

second

step, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, that is more-likely-than-

not

to be realized upon ultimate settlement. In the

first

six

months of

2018,

the Company decreased its liability for unrecognized tax benefits by

$0.3

million. As of

July 1, 2018,

the Company had accrued approximately

$28.9

million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of

July 1, 2018

reflects a reduction for

$3.3

million of these unrecognized tax benefits.