3.	Income Taxes

The Company’s provision for income taxes for the

nine

months ended

September 30, 2018

and

2017

is based on the estimated annual effective tax rate, plus discrete items. The following table presents the provision for income taxes and the effective tax rates for the

three

and

nine

months ended

September 30, 2018

and

2017

(in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Income (loss) before Income Taxes	$	18,137		$	(1,668	)	$	19,956		$	(20,667	)
Income tax provision (benefit)		1,679			(1,008	)		1,081			(7,203	)
Effective tax rate		9.3	%		60.4	%		5.4	%		34.9	%

The difference between the Company’s effective tax rate for the

three

and

nine

months ended

September 30, 2018

and

2017

and the US statutory rates of

21%

and

35%,

respectively, primarily relates to nondeductible expenses, nontaxable insurance benefits, federal income tax credits, state income taxes (net of federal benefit), and the effect of taxes on foreign earnings and certain discrete items. At

September 30, 2018,

the Company’s estimated annual effective tax rate also includes the impact of the new Global Intangible Low-Taxed Income (“GILTI”) tax, which is effective in

2018

as a result of the Act enacted on

December 22, 2017.

See further discussion below on our accounting policy associated with GILTI.

The following table presents the material discrete tax items recorded for the

three

and

nine

months ended

September 30, 2018 (

in thousands):

	Three Months ended September 30, 2018			Nine Months ended September 30, 2018
Tax-deductible IPO costs		(65	)		(546	)
Share based compensation tax deduction in excess of book expense		18			(723	)
Reductions to unrecognized tax benefits and related interest		(3,344	)		(3,344	)
Transition tax estimate update		716			716

The discrete tax items recorded for the

three

and

nine

months ended

September 30, 2017

were immaterial. At

September 30, 2018,

our analysis is still incomplete for provisional amounts recorded for the Act at

December 31, 2017,

however, we have reflected a

$0.7

million adjustment related to our updated estimate of the transition tax. The provisional amounts that continue to be evaluated include the estimation of the transition tax and state tax conformity issues of federal law changes. The reduction to unrecognized tax benefits and related interest is from our previously unrecognized tax benefit related to prior tax credits. The Company believes it to be reasonably possible that the amount of unrecognized tax benefits

may

change materially within the next

months, if this audit closes during that time period. The resolution of this uncertain tax position would impact the income tax provision (benefit) between

and $(

2.4

) million.

For the periods ended

September 30, 2018

and

December 31, 2017,

the Company had a balance of unrecognized tax benefits of

$2.7

million and

$5.5

million respectively, which is a component of other long-term liabilities.

	September 30, 2018			December 31, 2017
Beginning balance	$	5,506		$	5,200
Additions based on tax positions taken in prior years		-			306
Reductions as a result of a lapse of the applicable statute of limitations		(2,753	)		-
Reductions as a result of tax positions taken during prior periods		(93	)		-
Ending balance	$	2,660		$	5,506

Interest and penalties related to uncertain tax positions are classified as income tax provision (benefit) in the unaudited condensed consolidated statement of comprehensive income. This amounted to $(

0.5

) million and $(

0.4

) million for the

three

and

nine

months ended

September 30, 2018.

Global Intangible Low-Taxed Income:

The Act subjects a US shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic

740,

No.

Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Given the complexity of the GILTI provisions, we are still evaluating the effects of the GILTI provisions and have

not

yet determined our accounting policy. At

September 30, 2018,

because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current-year operations only in our estimated annual effective tax rate and have

not

provided additional GILTI on deferred items.