Income Taxes

12 Months Ended

Dec. 31, 2019

Note 8 Income Taxes

The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related deferred tax assets and liabilities.

Details of earnings before income taxes are as follows:

	2019			2018		2017
	(In thousands)
Domestic	$	62,639		$	31,584	$	52,745
Foreign		(1,032	)		4,268		2,088
Total	$	61,607		$	35,852	$	54,833

The provision (benefit) for income taxes is as follows:

	2019			2018			2017
	(In thousands)
Current:
Federal	$	12,113		$	9,223		$	20,553
State		2,591			2,640			2,933
Foreign		1,250			1,468			876
Deferred:
Federal		(1,066	)		(2,890	)		(3,051	)
State		417			(1,765	)		(915	)
Foreign		(875	)		(614	)		(134	)
Total	$	14,430		$	8,062		$	20,262

The provision for income tax differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate in each year due to the following items:

	2019			2018			2017
	(In thousands)
Provision at statutory rate	$	12,938		$	7,529		$	19,192
State income taxes, net of federal tax benefit		2,080			717			1,292
Valuation allowance		515			—			564
Foreign - tax rate differential and other		70			159			29
Domestic production activities deduction		—			—			(721	)
Federal tax credits		(609	)		(742	)		(542	)
Compensation subject to section 162(m)		66			562			—
Stock based compensation		(253	)		(384	)		—
Tax rate difference on temporary adjustments		—			(460	)		—
Other		(377	)		681			448
Actual provision	$	14,430		$	8,062		$	20,262

The components of deferred income taxes as of December 31 are as follows:

	2019			2018
	(In thousands)
Deferred tax assets:
Reserve for receivables and inventories	$	2,108		$	2,210
Accrued compensation		888			929
Payables		1,410			1,090
Non-pension postretirement benefits		1,505			1,110
Net operating loss and credit carryforwards		1,401			308
Accrued pension benefits		933			1,552
Accrued employee benefits		1,747			2,534
Deferred revenue		2,219			1,858
Operating lease liabilities		1,861			—
Other		497			—
Total gross deferred tax assets		14,569			11,591
Less: valuation allowance		(863	)		(366	)
Total net deferred tax assets		13,706			11,225
Deferred tax liabilities:
Depreciation		4,673			4,679
Amortization		6,158			7,146
Prepaids		529			517
Operating lease assets		1,850			—
Other		630			52
Total deferred tax liabilities		13,840			12,394
Net deferred tax liabilities	$	(134	)	$	(1,169	)

At December 31, 2019, the Company utilized all of the federal net operating losses. The Company’s remaining tax credit carryforward of $0.4 million relates to state specific tax credits that the Company expects to fully utilize in future tax periods. During 2019, the Company recorded a valuation allowance of $0.5 million against a deferred tax asset related to a German net operating loss.

No provision for federal income taxes was made on the earnings of foreign subsidiaries that are considered indefinitely invested or that would be offset by foreign tax credits upon distribution. Such undistributed earnings at December 31, 2019 were $22.1 million of which $22.7 million was previously taxed in the U.S. under the transition tax provisions and other provisions of the Internal Revenue Code.

Changes in the Company's gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:

	2019			2018
	(In thousands)
Balance at beginning of year	$	1,121		$	998
Increases in unrecognized tax benefits as a result of positions taken during the prior year		88			127
Increases in unrecognized tax benefits as a result of positions taken during the current year		235			190
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations		(279	)		(194	)
Balance at end of year	$	1,165		$	1,121

The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits during the fiscal year ending December 31, 2020. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2016, and, with few exceptions, state and local income tax examinations by tax authorities for years prior to 2015. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. Accrued interest was approximately $0.1 million at December 31, 2019 and 2018, respectively, and there were no penalties accrued in either year.