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Income Taxes | 9 Months Ended
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Sep. 30, 2018
Income Taxes [Abstract] |
Income Taxes |
Note 11 – Income Taxes
Income tax expense consists of the following:
| Nine Months Ended
| September 30,
(in thousands) |  | 2018 |  |  | 2017
|  |  |  | (as adjusted)
Federal – current | $ | 223 |  | $ | (984)
Foreign – current |  | 25,894 |  |  | 6,039
State – current |  | 7,673 |  |  | 275
Deferred |  | 11,863 |  |  | 581
| $ | 45,653 |  | $ | 5,911
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. The Company is subject to the GILTI provisions d ue 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 subject to the U.S. mand atory 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 s 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 recorded $30.7 million of deferred tax expense for foreign withho lding tax from Asia and $9.4 million of deferred U.S. state income tax expense in the first three months of 2018. During the nine months ended September 30, 2018, the Company repatriated $522.0 million of foreign earnings to the U.S. For future undistributed ear nings earned after December 31, 2017, the Company intends to indefinitely reinvest certain future undistributed foreign earnings from certain jurisdictions, and repatriate future earnings from other specific jurisdictions as part of its foreign cash manage ment strategy around the world. Excluding the impact of these items, i ncome tax expense differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income tax es primarily due to the mix of taxable income by tax ing jurisdiction, the impact of tax incentives and tax ho lidays in foreign locations, state income taxes (net of federal 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 nine months ended September 30, 2018 and 2017 by approximatel y $8.2 million (approximately $0.17 per diluted share) and $7.3 million (approximately $0.15 per diluted share), respectively, as follows:
| Nine Months Ended
| September 30,
(in thousands) |  | 2018 |  |  | 2017
China | $ | 1,449 |  | $ | 888
Malaysia |  | 3,219 |  |  | 3,151
Thailand |  | 3,579 |  |  | 3,294
| $ | 8,247 |  | $ | 7,333
As of September 30, 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 September 30, 2018, w as $47.0 thousand. There was no reserve for pot ential penalties. During the nine months ended September 30, 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 qu arter 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 ad ditional 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 income tax examinations by any jurisdiction. During the course of such income tax examinations, disputes may occur as to matters of fact or law. Also, i n most tax jurisdictions, the 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 pr ovided 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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