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Income Taxes | 3 Months Ended
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Mar. 31, 2019
Income Taxes [Abstract] |
Income Taxes |
Note 11 – Income Taxes
Income tax expense consists of the following:
| Three Months Ended
| March 31,
(in thousands) |  | 2019 |  |  | 2018
Federal – current | $ | 675 |  | $ | (304)
Foreign – current |  | 1,558 |  |  | 2,154
State – current |  | 688 |  |  | 306
Deferred |  | 685 |  |  | 39,000
| $ | 3,606 |  | $ | 41,156
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, adding a global intangible taxation regime and imposing a transition (Transition Tax) tax on deemed repatriated cumulative ea rnings of foreign subsidiaries. To minimize tax base erosion with a territorial tax system, the U.S. Tax Reform enacted a new global intangible lo w-taxed income (GILTI) provision that requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiaries tangible assets. The taxable earnings can be offset by a limited de emed paid foreign tax credit with no carrybacks or carryforwards available. The Company is subject to the GILTI provisions. The Company elected to account for the GILTI as a period cost and include the effect in the period in which it is incurred and not i nclude it as a factor in the determination of deferred taxes. As of December 31, 2018, the Company had approximately $330 million in cumulative undistributed foreign earnings of its foreign subsidiaries. These earnings would not be subject to U.S. income tax, if distributed to the Company. The Company has changed its assertion on its foreign subsidiaries earnings that are permanently reinvested. A certain amount of earnings from specific foreign subsidiaries are permanently reinvested, and certain foreign earnings from other specific foreign subsidiaries is considered to be non-permanently reinvested and is available for immediate distribution to the Company. Income taxes have been accrued on the non-permanently reinvested foreign earnings including the 201 7 Transition Tax, the U.S. tax on GILTI, and any applicable local withholding taxes. As a result of this change in assertion for undistributed earnings prior to December 31, 2017, the Company recorded $30.7 million of d eferred tax expense for foreign withholding tax from Asia and $9.4 million of deferred U.S. state income tax expense in the first three months of 2018. Excluding the impact of these items, i ncome tax expense differs from the amount computed by applying th e U.S. federal statutory income tax rate to income before income tax es 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 federal benefit) and th e U.S. tax under GILTI. The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Malaysia and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through 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, 2019 and 2018 by approximatel y $1.7 million (approximately $0.04 per diluted share) and $2.9 million (approximately $0.06 per diluted share), respectively, as follows:
| Three Months Ended
| March 31,
(in thousands) |  | 2019 |  |  | 2018
China | $ | — |  | $ | 422
Malaysia |  | 646 |  |  | 1,308
Thailand |  | 1,030 |  |  | 1,144
| $ | 1,676 |  | $ | 2,874
The Company’s Chinese subsidiary had a ta x incentive that expired in 2018 and expects to submit an application for a new tax incentive in China during the second half of 201 9. As of March 31, 2019, the total amount of the reserve for uncertain tax benefits including interest and penalties was $0.4 million. The reserve is classified as a current or long-term liability in the condensed consolidated balance sheet s based on the Compa ny’s expectation of when the items will be settled. The Company records interest expense and penalties accrued in relation to uncertain income tax benefits as a component of current income tax expense. The amount of accrued potential interest on unrecogniz ed tax benefits included in the reserve as of March 31, 2019 w as $0.1 million. The reserve for potential penalties was seventeen thousand dollars. The Company and its subsidiaries in Brazil, China, Ireland, Malaysia, Mexico, the Neth erlands, 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 2012 to 2018. 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, in most tax jurisdictions, the passage of time without examination will result in the expiration of applicable statutes of limitatio ns thereby precluding examination of the tax period(s) for which such statute of limitation has expired. The Company believes that it has adequately provided 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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