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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
INCOME TAXES |
INCOME TAXES | 14. INCOME TAXES The provision for income taxes included the following components for the years ended December 31, 2019 and 2018:
|  | 2019 |  | 2018
|  | (Dollars in thousands)
Current: |  |  |  |  |  |
Federal |  | $ | 4,784 |  | $ | 3,358
State |  |  | 1,510 |  |  | 1,048
Foreign |  |  | 777 |  |  | 749
Total |  |  | 7,071 |  |  | 5,155
Deferred |  |  | (869) |  |  | 643
Total provision |  | $ | 6,202 |  | $ | 5,798
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, 2019 and 2018:
|  | 2019 |  | 2018 |
U.S. federal statutory income tax rate |  | 21.0 | % | 21.0 | %
State income taxes, net of federal tax benefit |  | 4.3 |  | 3.6 |
Non-taxable municipal bond interest |  | (0.4) |  | (0.5) |
Foreign income tax rate differences |  | — |  | 0.8 |
Tax settlements |  | (1.2) |  | — |
Share-based compensation |  | 0.2 |  | (2.5) |
Other |  | (1.0) |  | 0.1 |
Effective tax rate |  | 22.9 | % | 22.5 | %
The foreign component of pretax net earnings was a loss of $2,127,000 and net earnings of $262,000 for 2019 and 2018, respectively. The components of deferred taxes at December 31, 2019, and 2018 were as follows:
|  | 2019 |  | 2018
|  | (Dollars in thousands)
Deferred income tax assets: |  |  |  |  |  |
Accounts receivable reserves |  | $ | 197 |  | $ | 192
Pension liability |  |  | 7,274 |  |  | 6,122
Accrued liabilities |  |  | 1,794 |  |  | 1,779
Operating lease liabilities |  |  | 4,475 |  |  | —
Carryfoward losses |  |  | 1,727 |  |  | 637
Foreign currency losses on intercompany loans |  |  | 39 |  |  | 81
|  |  | 15,506 |  |  | 8,811
Deferred income tax liabilities: |  |  |  |  |  |
Inventory and related reserves |  |  | (2,795) |  |  | (2,832)
Cash value of life insurance |  |  | (431) |  |  | (382)
Property, plant and equipment |  |  | (1,195) |  |  | (1,145)
Intangible assets |  |  | (7,482) |  |  | (6,702)
Operating lease right-of-use assets |  |  | (3,960) |  |  | —
Prepaid expenses and other assets |  |  | (241) |  |  | (197)
|  |  | (16,104) |  |  | (11,258)
Net deferred income tax liabilities |  | $ | (598) |  | $ | (2,447)
The net deferred tax liabilities are classified in the Consolidated Balance Sheets as follows:
|  | 2019 |  | 2018
|  | (Dollars in thousands)
Non-current deferred income tax benefits |  | $ | 2,487 |  | $ | 1,277
Non-current deferred income tax liabilities |  |  | (3,085) |  |  | (3,724)
Net deferred income tax liabilities |  | $ | (598) |  | $ | (2,447)
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:
|  | 2019 |  | 2018
|  | (Dollars in thousands)
Unrecognized tax benefits balance at January 1, |  | $ | 772 |  | $ | 412
Increases related to current year tax positions |  |  | 190 |  |  | 399
Decreases due to settlements of tax positions |  |  | (275) |  |  | —
Decreases due to lapsing of statute of limitations |  |  | (51) |  |  | (39)
Unrecognized tax benefits balance at December 31, |  | $ | 636 |  | $ | 772
The unrecognized tax benefits at December 31, 2019 and 2018, include $115,000 and $245,000, 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, 2019 and 2018. The Company files a U.S. federal income tax return, various U.S. state income tax returns and several foreign returns. In general, the 2016 through 2019 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://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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