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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

11.

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 2015.

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

Year ended December 31,		2018								2017								2016
		Current				Deferred				Current				Deferred				Current				Deferred
Federal		$	17,574			$	(3,265	)		$	20,232			$	1,865			$	31,393			$	10,181
State			3,859				(387	)			3,987				(580	)			5,678				1,197
		$	21,433			$	(3,652	)		$	24,219			$	1,285			$	37,071			$	11,378

Changes in deferred tax assets relating to the adoption of ASC 606 are not charged to expense and are therefore not included in the deferred tax provision; instead they are charged to retained earnings.

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

Year ended December 31,		2018				2017				2016
Statutory federal income tax rate			21.0	%			35.0	%			35.0	%
State income taxes, net of federal tax benefit			4.0				2.9				3.3
Domestic production activities deduction			—				(2.6	)			(2.3	)
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				(0.9	)			(0.4	)
Effective income tax rate			25.9	%			32.8	%			35.6	%

The Tax Cuts and Jobs Act of 2017 lowered 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 2019 will approximate 25.1%.

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 and did not impact the effective tax rate for the period ended December 31, 2018. The adoption of this pronouncement did not have a material impact on the Company’s results of operations or financial position in either year.

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

December 31,		2018				2017
Deferred tax assets
Product Liability		$	294			$	201
Employee compensation and benefits			2,356				2,336
Allowances for doubtful accounts and discounts			2,750				1,769
Inventories			729				758
Stock-based compensation			2,292				1,406
Other			1,113				1,326
Total deferred tax assets			9,534				7,796
Deferred tax liabilities:
Depreciation			6,256				8,956
Other			309				242
Total deferred tax liabilities			6,565				9,198
Net deferred tax (liabilities) assets		$	2,969			$	(1,402	)

The Company made income tax payments of approximately $18.1 million, $23.4 million, and $43.0 million, during 2018, 2017, and 2016, respectively. The Company expects to realize its deferred tax assets through tax deductions against future taxable income.

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.