Note 7 - Income Taxes

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

7

–

Income Taxes:

The Company calculates its interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, the Company makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date income or loss. The tax expense or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur.

In addition, the effect of changes in enacted tax laws or rates, tax status, or judgment on the attainment of beginning-of-the-year deferred taxes in future years is recognized in the interim period in which the change occurs.

The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but

not

limited to, the expected operating income for the year and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes

may

change as new events occur, more experience is acquired, additional information is obtained or the tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in tax expense for the current quarter.

For the

three

months ended

September 30, 2019

, the Company recorded a provision for income taxes of

$0.7

million, which represents an effective tax rate of

15.3%

. For the

three

months ended

September 30, 2018

, the Company recorded a provision for income taxes of

$1.2

million, which represents an effective tax rate of

15.9%

. For the

nine

months ended

September 30, 2019

, the Company recorded a provision for income taxes of

$2.2

million, which represents an effective tax rate of

19.4%

. For the 

nine

months ended

September 30, 2018

, the Company recorded a provision for income taxes of

$3.3

million, which represents an effective tax rate of

21.1%

. The decreases in the effective tax rates were primarily due to a reduction in non-deductible acquisition expense and a decrease in the Global Intangible Low Tax Income (“GILTI”) tax, partially offset by the impact of lower contingent liability adjustments.

The difference between the statutory Federal income tax rate and the actual effective income tax rate is accounted for as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Statutory Federal income tax rate		21.0	%		21.0	%		21.0	%		21.0	%
State and local income taxes, net of Federal income tax benefit		4.0	%		3.8	%		4.0	%		4.1	%
Taxes attributable to foreign income		(8.6	%)		(6.8	%)		(6.0	%)		(5.8	%)
GILTI tax		2.9	%		3.7	%		2.2	%		3.7	%
Contingent liability adjustments		(1.9	%)		(2.7	%)		(0.8	%)		(1.9	%)
Compensation related		0.3	%		1.6	%		0.2	%		1.4	%
Non-deductible acquisition expense		-			1.9	%		-			1.8	%
Federal tax credits		(0.7	%)		-			(0.7	%)		(0.5	%)
Other		(1.7	%)		(6.6	%)		(0.5	%)		(2.7	%)
Effective income tax rate		15.3	%		15.9	%		19.4	%		21.1	%