Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. Income Taxes

The provisions for income taxes were

$1.5

million and

$1.9

million for the

three

- and

nine

-month periods ended

September 30, 2018,

based on effective tax rates of

16.4%

and

14.7%,

respectively. 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%

.

The net decrease in the effective tax rate for the

three

- and

nine

-month periods ended

September 30, 2018,

as compared to the same periods in

2017,

was primarily due to the reduction of Federal Corporate Income Tax rate as a result of the Tax Cuts and Jobs Act of

2017

(“Tax Act”) tax reform legislation. This legislation makes significant changes to the U.S. tax law, including a reduction in the corporate tax rate from

35%

to

21%

starting in

2018.

In addition, the Company realized a windfall tax benefit for the

nine

-month period ended

September 30, 2018

related to exercises of employee equity awards resulting in a discrete period income tax benefit of

$1.6

million and a reduction in the effective tax rate of

12.1%.

The Company realized a

$0.1

million windfall tax benefit for the

three

-month period ended

September 30, 2018.

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 assesses whether 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, 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 as of

September 30, 2018

or

December 31, 2017.

In accordance with Staff Accounting Bulletin

No.

118,

which provides guidance on accounting for the tax effects of the Tax Act, the Company has recorded the impact on the condensed consolidated financial statements. There were

no

significant changes in the provision amount recorded in

2017

related to the finalization of the Company’s analysis. The other provisions of the Tax Act did

not

have a material impact on the

2017

consolidated financial statements.