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Income Taxes | 3 Months Ended
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Mar. 31, 2018
Income Taxes [Abstract] |
Income Taxes |
Note 11 – Income Taxes
Income tax expense consists of the following:
| Three Months Ended
| March 31,
(in thousands) |  | 2018 |  |  | 2017
|  |  |  | (as adjusted)
Federal – current | $ | (304) |  | $ | (212)
Foreign – current |  | 2,154 |  |  | 1,112
State – current |  | 306 |  |  | 128
Deferred |  | 39,000 |  |  | 74
| $ | 41,156 |  | $ | 1,102
The U.S. Tax Cuts and Jobs Act (U.S. Tax Reform), which was signed into law on December 22, 2017, significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. The U.S. Tax Reform reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. To minimize tax base erosion with a territorial tax system, the U.S. Tax Reform enacted a new global intangible low-taxed income (GILTI) provision. Under the GILTI provision, certa in foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s depreciable tangible assets are included in U.S. taxable income offset by a limited deemed paid foreig n tax credit. T he Company is subject to the GILTI provisions due to its operations in foreign jurisdictions. As of December 31, 2017, the Company had approximately $928 million in cumulative undistributed foreign earnings outside the U.S. Substantially all of these undistributed earnings are subje ct to the U.S. mandatory repatriation tax and are eligible to be repatriated to the U.S. without additional U.S. tax under the U.S. Tax Reform. The Company has historically asserted its intention to indefinitely reinvest und istributed foreign earnings. T he Company no longer consider these earnings to be indefinitely reinvested in its foreign subsidiaries. As a result of this change in assertion for undistributed earnings prior to December 31, 2017, the Company has recorded $30.7 million of deferred tax expe nse for foreign withholding tax from Asia and $9.4 million of deferred U.S. state income tax expense in the first quarter of 2018. During the three months ended March 31, 2018, the Company repatriated $277.0 million of foreign earnings to the U.S. The Comp any expects to repatriate an additional $223.0 million of foreign earnings to the U.S. in 2018. For future undistributed earnings earned after December 31, 2017, the Company will assert its intention to indefinitely reinvest certain future undistributed fo reign earnings from certain jurisdictions, and repatriate future earnings from other specific jurisdictions as part of its foreign cash management strategy around the world. Excluding the impact of these items, i ncome tax expense differs from the amount c omputed by applying the U.S. federal statutory income tax rate to income before income tax primarily due to the mix of taxable income by taxing jurisdiction, the impact of tax incentives and tax ho lidays in foreign locations, state income taxes (net of fed eral benefit) and the U.S. tax under GILTI. The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in China, Malaysia and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through 2018 in China, 2021 in Malaysia and 2028 in Thailand, and are subject to certain conditions with which the Company expects to comply. The net impact of these tax incentives was to lower income tax expense for the three months ended March 31, 2018 and 2017 by approximatel y $2.9 million (approximately 0.06 per diluted share) and $1.3 million (approximately $0.03 per diluted share), respectively, as follows:
| Three Months Ended
| March 31,
(in thousands) |  | 2018 |  |  | 2017
China | $ | 422 |  | $ | 167
Malaysia |  | 1,308 |  |  | 532
Thailand |  | 1,144 |  |  | 556
| $ | 2,874 |  | $ | 1,255
As of March 31, 2018, the total amount of the reserve for uncertain tax benefits including interest was $0.3 million. The reserve is classified as a current or long-term liability in the condensed consolidated balance sheet s based on the Company’s expectation of when the items will be settled. The amount of accrued potential interest on unrecognized tax benefits included in the reserve as of March 31, 2018, w as $47.0 thousand. There was no reserve for pot ential penalties. During the three months ended March 31, 2018, the Company released $0.5 million of uncertain tax benefits from a U.S. Internal Revenue Service (IRS) audit related to the Secure Communication Systems, Inc. acquisition. During the first q uarter of 2018, the IRS indicated that this examination of years 2013 to 2015 was closed. In addition, the IRS also notified the Company that the examination of the Company’s consolidated U.S. income tax return filings for 2014 was also closed with no a dditional tax costs. The Company and its subsidiaries in Brazil, China, Ireland, Luxembourg, Malaysia, Mexico, t he Netherlands, Romania, Singapore, Thailand and the United States remain open to examination by the various local taxing authorities, in total o r in part, for fiscal years 2011 to 201 7. Currently, the Company does not have any ongoing tax examinations by any jurisdiction. During the course of such examinations, disputes may occur as to matters of fact or law. Also, i n most tax jurisdictions, th e passage of time without examination will result in the expiration of applicable statutes of limitations thereby precluding examination of the tax period(s) for which such statute of limitation has expired. The Company believes that it has adequately prov ided for its tax liabilities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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