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Note 7 - Taxes on Income | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 7 – Taxes on Income: Aggregate income tax provisions consist of the following (in thousands):
|  | 2018 |  |  | 2017 |  |  | 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,613 |  |  | $ | 2,846 |  |  | $ | 5,642 |
Tax Cut and Jobs Act |  |  | - |  |  |  | 265 |  |  |  | - |
State and local |  |  | 643 |  |  |  | 647 |  |  |  | 628 |
Foreign |  |  | 789 |  |  |  | 338 |  |  |  | - |
|  |  | 5,045 |  |  |  | 4,096 |  |  |  | 6,270 |
Long Term: |  |  |  |  |  |  |  |  |  |  |  |
Tax Cut and Jobs Act |  |  | - |  |  |  | 1,336 |  |  |  | - |
Deferred Taxes: |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax (benefit) provision |  |  | (625 | ) |  |  | 1,899 |  |  |  | (1,010 | )
Tax Cut and Jobs Act re-measurement |  |  | - |  |  |  | 2,429 |  |  |  | - |
|  |  | (625 | ) |  |  | 4,328 |  |  |  | (1,010 | )
|  | $ | 4,420 |  |  | $ | 9,760 |  |  | $ | 5,260 |
The significant components of the deferred income tax (liability) asset are as follows (in thousands):
|  | 2018 |  |  | 2017 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Pension accruals |  | $ | 2,729 |  |  | $ | 2,606 |
Operating reserves and other accruals |  |  | 1,984 |  |  |  | 2,174 |
Tax carrying value in excess of book basis of intangibles |  |  | - |  |  |  | 866 |
Tax credits |  |  | 748 |  |  |  | 255 |
Valuation allowance on tax credits |  |  | (748 | ) |  |  | (255 | )
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Book carrying value in excess of tax basis of property |  |  | (1,495 | ) |  |  | (937 | )
Book carrying value in excess of tax basis of intangibles |  |  | (6,906 | ) |  |  | - |
Tax effect of revenue recognition standard ASC 606 |  |  | (2,657 | ) |  |  | - |
Deferred expenses |  |  | (2,130 | ) |  |  | (1,809 | )
Net deferred income tax (liability) asset |  | $ | (8,475 | ) |  | $ | 2,900 |
The difference between the total statutory Federal income tax rate and the actual effective income tax rate is accounted for as follows:
|  | 2018 |  |  | 2017 |  |  | 2016 |
Statutory Federal income tax rate |  |  | 21.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State and local income taxes, net of Federal income tax benefit |  |  | 2.0 |  |  |  | 1.5 |  |  |  | 1.9 |
Current year untaxed foreign income |  |  | (8.3 | ) |  |  | (6.5 | ) |  |  | (5.1 | )
Foreign Taxes |  |  | 2.6 |  |  |  | 1.4 |  |  |  | - |
GILTI Tax |  |  | 2.7 |  |  |  | - |  |  |  | - |
Contingent liability adjustments |  |  | (1.4 | ) |  |  | - |  |  |  | - |
Non-deductible share-based employee compensation expense |  |  | 0.6 |  |  |  | 1.1 |  |  |  | 1.2 |
Excess tax benefit from stock compensation |  |  | (0.3 | ) |  |  | (7.2 | ) |  |  | (4.4 | )
Excess executive compensation |  |  | 0.9 |  |  |  | - |  |  |  | - |
Non-deductible acquisition expense |  |  | 1.7 |  |  |  | - |  |  |  | - |
Federal tax credits |  |  | (0.4 | ) |  |  | (0.5 | ) |  |  | (0.8 | )
Tax Cut and Jobs Act deferred tax re-measurement |  |  | - |  |  |  | 6.9 |  |  |  | - |
Tax on undistributed foreign earnings |  |  | 1.1 |  |  |  | 2.9 |  |  |  | - |
Transition tax (repatriation) |  |  | (0.8 | ) |  |  | 5.9 |  |  |  | - |
Other items |  |  | (0.7 | ) |  |  | (0.1 | ) |  |  | (0.4 | )
Effective income tax rate |  |  | 20.7 | % |  |  | 39.4 | % |  |  | 26.4 | %
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the U.S. tax system. The Tax Act includes changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also permanently reduces the corporate tax rate from 34% to 21%, imposes a one -time mandatory transition tax on the historical earnings of foreign affiliates and implements a territorial style tax system. In 2017, income tax expense of $9.8 million was unfavorably impacted by net discrete adjustments of $4.0 million, due to a charge of $3.3 million related to the enactment of the Tax Cut and Jobs Act (the “Tax Act”) in the United States and $0.7 million related to other miscellaneous discrete items. Effective January 1, 2018, the Tax Act established a corporate income tax rate of 21%, replacing the current 34% rate, and creating a territorial tax system rather than a worldwide system, which generally eliminates the U.S. federal income tax on dividends from foreign subsidiaries. The transition to the territorial system included a one -time transition tax in 2017 on certain of our foreign earnings previously untaxed in the United States. In general, the one -time transition tax imposed by the Tax Act results in the taxation of our accumulated foreign earnings and profits (“E&P”) at a 15.5% rate on liquid assets and 8% on the remaining unremitted foreign E&P, both net of foreign tax credits. In addition, the Company no longer intends to permanently reinvest its historical foreign earnings and has recorded an additional deferred tax expense of $0.9 million. Effective January 1, 2018, The Tax Act imposes a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. In accordance with guidance issued by FASB, the Company has made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred. Only tax positions that meet the more-likely-than- not recognition threshold are recognized in the consolidated financial statements. As of December 31, 2018 and 2017, respectively, we have $0.6 and $0.5 million of unrecognized tax benefits, all of which, if recognized, would favorably affect the annual effective income tax rate. We do not expect any significant amount of this liability to be paid in the next twelve months. Accordingly, the balance of $0.6 million as of December 31, 2018 is included in other long-term liabilities. Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:
(In thousands) |  |  |  |  |  |  |  |
|  | 2018 |  |  | 2017 |
Balance at the beginning of year |  | $ | 400 |  |  | $ | 399 |
Additions based on tax positions related to the current year |  |  | 56 |  |  |  | 59 |
Additions for tax positions of prior years |  |  | 85 |  |  |  | - |
Reductions due to lapse of statute of limitations |  |  | (64 | ) |  |  | (58 | )
Balance at the end of year |  | $ | 477 |  |  | $ | 400 |
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. During each of the years 2018, 2017 and 2016, we recorded $ 0.1 million for interest and penalties, net of tax benefits. During each of the years 2018, 2017 and 2016, we reduced the liability $ 0.1 million for interest and penalties due to lapse of statute of limitations. At December 31, 2018 and 2017, we had $ 0.1 million accrued for interest and penalties, net of tax benefit. We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $0.1 million within the next 12 months due to the closure of tax years by expiration of the statute of limitations and audit settlements related to various state tax filing positions. The earliest year open to federal examinations is 2015 and significant state examinations is 2011.

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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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