PROVISION FOR INCOME TAXES

6 Months Ended

Jun. 30, 2018

PROVISION FOR INCOME TAXES [Abstract]

PROVISION FOR INCOME TAXES

6. PROVISION FOR INCOME TAXES

Our deferred tax liabilities and deferred tax assets are impacted by events and transactions arising in the ordinary course of business, R&D activities, vesting of nonqualified options and other items. The provision for income taxes is based on an estimated effective tax rate derived from our consolidated earnings before taxes, adjusted for nondeductible expenses and other permanent differences for the fiscal year. For the three and six months ended June 30, 2018, the provision for income taxes was $1.0 million and $2.0 million, respectively. As of June 30, 2018 and December 31, 2017, our remaining deferred tax assets were approximately $0.3 million and $1.7 million, respectively.

For the three and six months ended June 30, 2017, the provision for income taxes was $1.4 million and $3.2 million, respectively.

The estimated effective tax rate for the three and six months ended June 30, 2018 was 18.2% and 19.7%, respectively, of pre-tax income reported in the period, calculated based on the estimated annual effective rate anticipated for the year ending December 31, 2018 plus the effects of certain discrete items occurring in 2018. Our effective tax rate for the six months ended June 30, 2018 was impacted primarily by the Tax Cuts and Jobs Act of 2017, which was enacted on December 22, 2017 and lowered the U.S. corporate tax rate from 35% to 21%, beginning in 2018. Our effective tax rate was also impacted by the discrete impact of current period stock option exercises which impacts the effective rate in the period in which it occurs. The effective tax rate for the six months ended June 30, 2017 was 34.8% of pre-tax income reported in the period, calculated based on the estimated annual effective rate anticipated for the year ending December 31, 2017 plus the effects of certain material discrete items that occurred in 2017.

As of June 30, 2018, the Company has no unrecognized tax benefits or related interest and penalties. Management does not believe that there is any tax position which it is reasonably possible that will result in unrecognized tax benefit within the next 12 months.