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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

10. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2014.

The federal and state income tax provision consisted of the following:

Year ended December 31,		2017								2016								2015
		Current				Deferred				Current				Deferred				Current				Deferred
Federal		$	20,232			$	1,865			$	31,393			$	10,181			$	31,382			$	(2,774	)
State			3,987				(580	)			5,678				1,197				5,849				(483	)
		$	24,219			$	1,285			$	37,071			$	11,378			$	37,231			$	(3,257	)

The effective income tax rate varied from the statutory federal income tax rate as follows:

Year ended December 31,		2017				2016				2015
Statutory federal income tax rate			35.0	%			35.0	%			35.0	%
State income taxes, net of federal tax benefit			2.9				3.3				3.6
Domestic production activities deduction			(2.6	)			(2.3	)			(3.2	)
Impact of Accounting Standard Update 2016-09			(0.9	)			—				—
Impact of Tax Cuts and Jobs Act on deferred taxes			(0.7	)			—				—
Other items			(0.9	)			(0.4	)			—
Effective income tax rate			32.8	%			35.6	%			35.4	%

As discussed in the Recent Accounting Pronouncements section of Note 1 to the Consolidated Financial Statements, the Company adopted ASU 2016-09 in the first quarter of 2017. The impact of adopting this change in accounting principle reduced the Company’s effective tax rate by 0.9% for the period ending December 31, 2017. This did not have a material impact on the Company’s results of operations or financial position.

The Tax Cuts and Job Act of 2017 lowers the statutory corporate tax rate from 35% to 21% for years beginning after December 31, 2017. The Company estimates that its effective tax rate in 2018 will approximate 24.5%. As a result, the value of net deferred tax liabilities at December 31, 2017 was reduced by $0.5 million.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). The new guidance requires that all deferred tax assets and liabilities be presented as a net noncurrent asset or liability on the balance sheet. Previously such items were presented as a net current asset or liability and a net noncurrent asset or liability. The new guidance was effective for fiscal years beginning after December 15, 2016 and interim periods thereafter. The Company adopted ASU 2015-17 in the first quarter of 2017 and applied it retroactively to all prior periods presented in the financial statements. The impact of adopting this change in accounting principle on the December 31, 2016 balance sheet was to reduce current deferred tax assets and working capital by $8.8 million and noncurrent deferred tax liabilities by $8.5 million from the amounts previously reported for these items.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,		2017				2016
Deferred tax assets
Product Liability		$	201			$	655
Employee compensation and benefits			2,336				3,627
Allowances for doubtful accounts and discounts			1,769				3,813
Inventories			758				981
Stock-based compensation			1,406				2,527
Other			1,326				1,533
Total deferred tax assets			7,796				13,136
Deferred tax liabilities:
Depreciation			8,956				12,457
Other			242				345
Total deferred tax liabilities			9,198				12,802
Net deferred tax (liabilities) assets		$	(1,402	)		$	334

The Company made income tax payments of approximately $23.4 million, $43.0 million, and $27.5 million, during 2017, 2016, and 2015, respectively. The Company expects to realize its deferred tax assets through tax deductions against future taxable income or carry back against taxes previously paid.

The Company does not believe it has included any “uncertain tax positions” in its federal income tax return or any of the state income tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently consider itself liable. The Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position.