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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | ## 12. INCOME TAXES The provision for income taxes included the following components for the years ended December 31, 2017, 2016 and 2015:
|  | 2017 |  | 2016 |  | 2015
|  | (Dollars in thousands)
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,904 |  |  | $ | 5,965 |  |  | $ | 8,801 |
State |  |  | 499 |  |  |  | 1,027 |  |  |  | 1,314 |
Foreign |  |  | 633 |  |  |  | 737 |  |  |  | 501 |
Total |  |  | 5,036 |  |  |  | 7,729 |  |  |  | 10,616 |
Deferred |  |  | 2,187 |  |  |  | (2,645 | ) |  |  | 346 |
Total provision |  | $ | 7,223 |  |  | $ | 5,084 |  |  | $ | 10,962 |
The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2017, 2016 and 2015:
|  | 2017 |  | 2016 |  | 2015
U.S. federal statutory income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal tax benefit |  |  | 2.9 |  |  |  | 3.5 |  |  |  | 3.4 |
Non-taxable municipal bond interest |  |  | (0.9 | ) |  |  | (1.0 | ) |  |  | (1.0 | )
Foreign income tax rate differences |  |  | 0.1 |  |  |  | (0.6 | ) |  |  | 0.4 |
Life insurance deferred tax reversal |  |  | — |  |  |  | (14.2 | ) |  |  | — |
Impact of tax rate change on deferred taxes |  |  | (5.8 | ) |  |  | — |  |  |  | — |
Other |  |  | (1.1 | ) |  |  | 0.3 |  |  |  | (0.1 | )
Effective tax rate |  |  | 30.2 | % |  |  | 23.0 | % |  |  | 37.7 | %
On December 22, 2017, the TCJA was enacted. The TCJA makes broad and complex changes to the U.S. tax code including, among other things, (1) reducing the U.S. federal corporate tax rate, and (2) requiring a one-time transition tax on certain unremitted earnings of foreign subsidiaries. The TCJA reduces the U.S. federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. In the fourth quarter of 2017, the Company recognized $1.5 million of non-cash tax benefit due to the revaluation of deferred tax assets and liabilities from the change in the U.S. federal corporate tax rate. This tax benefit reduced the Company’s provision for income taxes and effective tax rate for 2017. The Company also analyzed, in reasonable detail, based on a current earnings and profit studies of the Company’s foreign subsidiaries, the impact of the one-time transition tax. Based on this analysis, management determined that the impact of the one-time transition tax would not be material to the Company’s consolidated financial position, results of operations or cash flows. Tax benefits recognized in connection with the enactment of the TCJA may change due to, among other things, additional guidance that may be issued by the U.S. Department of the Treasury with respect to the TCJA and revisions to the Company’s assumptions as further information and interpretations become available. In the fourth quarter of 2016, the Company’s provision for income taxes and effective tax rate were reduced due to a one-time adjustment related to corporate-owned life insurance policies. At that time, the Company reviewed its liquidity needs and sources of capital, including evaluating whether it would need the cash available under corporate-owned life insurance policies on two former executives. It was determined that the chances were remote that the Company would need to surrender the policies to satisfy liquidity needs, and, as a result, the Company reversed the $3.1 million deferred tax liability related to the policies. The foreign component of pretax net earnings was $1.9 million, $2.7 million, and $1.3 million for 2017, 2016, and 2015, respectively. In general, it is the Company’s practice and intention to permanently reinvest unremitted earnings of foreign subsidiaries, and this position has not changed following the enactment of the TCJA. As of December 31, 2017, unremitted foreign earnings of foreign subsidiaries totaled $7.1 million. A deferred tax liability has not been recorded on these unremitted foreign earnings. Future dividends, if any, would be paid only out of current year earnings. Notwithstanding the above, if the unremitted foreign earnings at December 31, 2017 were to be repatriated in the future, the related deferred tax liability would not be material to Company’s financial statements. The components of deferred taxes as of December 31, 2017, and 2016 were as follows:
|  | 2017 |  | 2016
|  | (Dollars in thousands)
Deferred income tax assets: |  |  |  |  |  |  |  |
Accounts receivable reserves |  | $ | 199 |  |  | $ | 341 |
Pension liability |  |  | 7,307 |  |  |  | 11,002 |
Accrued liabilities |  |  | 1,975 |  |  |  | 2,648 |
Carryfoward losses |  |  | 250 |  |  |  | 129 |
Foreign currency losses on intercompany loans |  |  | (46 | ) |  |  | 53 |
|  |  | 9,685 |  |  |  | 14,173 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Inventory and related reserves |  |  | (2,989 | ) |  |  | (3,744 | )
Cash value of life insurance |  |  | (337 | ) |  |  | (441 | )
Property, plant and equipment |  |  | (1,373 | ) |  |  | (1,483 | )
Intangible assets |  |  | (6,125 | ) |  |  | (8,284 | )
Prepaid expenses and other assets |  |  | (180 | ) |  |  | (264 | )
|  |  | (11,004 | ) |  |  | (14,216 | )
Net deferred income tax liabilities |  | $ | (1,319 | ) |  | $ | (43 | )
The net deferred tax liabilities are classified in the Consolidated Balance Sheets as follows:
|  | 2017 |  | 2016
|  | (Dollars in thousands)
Non-current deferred income tax benefits |  | $ | 750 |  |  | $ | 660 |
Non-current deferred income tax liabilities |  |  | (2,069 | ) |  |  | (703 | )
Net deferred income tax liabilities |  | $ | (1,319 | ) |  | $ | (43 | )
## Uncertain Tax Positions The Company accounts for its uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 provides that the tax effects from an uncertain tax position can be recognized in the Company’s consolidated financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
|  | 2017 |  | 2016 |  | 2015
|  | (Dollars in thousands)
Unrecognized tax benefits balance at January 1, |  | $ | 275 |  |  | $ | 284 |  |  | $ | — |
Increases related to current year tax positions |  |  | 144 |  |  |  | 239 |  |  |  | 284 |
Decreases due to settlements of tax positions |  |  | (7 | ) |  |  | (248 | ) |  |  | — |
Unrecognized tax benefits balance at December 31, |  | $ | 412 |  |  | $ | 275 |  |  | $ | 284 |
The unrecognized tax benefits at December 31, 2017 and 2016, include $72,000 and $70,000, respectively, of interest related to such positions. The unrecognized tax benefits, if ultimately recognized, would reduce the Company’s annual effective tax rate. The liabilities for potential interest are included in the Consolidated Balance Sheets at December 31, 2017 and 2016. The Company files a U.S. federal income tax return, various U.S. state income tax returns and several foreign returns. In general, the 2014 through 2017 tax years remain subject to examination by those taxing authorities.

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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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