Note 14 - Income Taxes

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14. Income Taxes

Provisions for income taxes were

$3.6

million and

$12.6

million for the

three

- and

nine

-month periods ended

September 30, 2017,

based on an effective tax rate of

34.6%

for both periods.  Provisions for income taxes were

$4.8

million and

$13.6

million for the

three

- and

nine

-month periods ended

September 30, 2016,

based on effective tax rates of

35.0%

and

35.8%,

respectively. The decrease in income taxes for the

three

- and

nine

-month periods ended

September 30, 2017

resulted from decreased income before income taxes in addition to a net decrease in the effective tax rate as compared to the same period in the prior year. The net decrease in the effective tax rate

for the

three

- and

nine

-month periods ended

September 30, 2017,

as compared to the same periods in

2016,

was primarily due to the increase in the expected research and development and state investment tax credits.  In addition, the Company realized windfall tax benefits related to share-based payments in connection with the adoption of ASU

2016

-

09

during the period. The amount of excess tax benefits recognized as a discrete period income tax benefit was

$0.0

and

$0.3

million for the

three

- and

nine

-month periods ended

September 30, 2017,

respectively, which decreased the effective tax rate for the interim periods by

0.0%

and

0.9%,

respectively. Prior to the adoption of ASU

2016

-

09

excess tax benefits and deficiencies were recorded in equity. The amount of excess tax benefits recognized through additional paid-in-capital was

$0.0

million and

$0.4

million for the

three

- and

nine

-month periods ended

September 30, 2016,

respectively.

The Company files income tax returns in the United States on a federal basis, in certain U.S. states, and in Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate.

In connection with the preparation of the financial statements, the Company performed an analysis to ascertain if it was more likely than

not

that it would be able to utilize, in future periods, the net deferred tax assets associated with its net operating loss carry-forward. The Company has concluded that the positive evidence outweighs the negative evidence and, thus, that the deferred tax assets

not

otherwise subject to a valuation allowance are realizable on a “more likely than

not”

basis. As such, the Company did

not

record a valuation allowance at

September 30, 2017

or

December 31, 2016.