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Note 16 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 16. Income Taxes New Tax Legislation On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “2017 Tax Act”) tax reform legislation. This legislation makes significant changes to the U.S. tax law, including a reduction in the corporate tax rate from the current rate of 35% to 21% starting in 2018. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities at the future rate. This revaluation resulted in a $2.3 million income tax benefit in continuing operations and a corresponding reduction in the deferred tax liability. The other provisions of the 2017 Tax Act did not have a material impact on the 2017 consolidated financial statements. In accordance with Staff Accounting Bulletin No. 118, which provides guidance on accounting for the tax effects of the 2017 Tax Act, the Company has recorded a reasonable estimate of the impact on the consolidated financial statements. The provisional amounts incorporate assumptions made based upon the Company’s current interpretation and implementation guidance of the 2017 Tax Act. The Company does not expect a significant adjustment to the recorded amounts. Income Tax Expense The components of the Company’s income before income taxes and its provision for (benefit from) income taxes consist of the following:
|  | Years ended December 31,
|  | 2017 |  | 2016 |  | 2015
Income before income taxes |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 48,446 |  |  | $ | 50,181 |  |  | $ | 48,608 |
Foreign |  |  | (2,244 | ) |  |  | 689 |  |  |  | (354 | )
|  | $ | 46,202 |  |  | $ | 50,870 |  |  | $ | 48,254 |
|  | Years ended December 31,
|  | 2017 |  | 2016 |  | 2015
Provision for (benefit from) income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 12,608 |  |  | $ | 14,982 |  |  | $ | 14,572 |
State |  |  | 2,737 |  |  |  | 3,265 |  |  |  | 3,635 |
Foreign |  |  | 31 |  |  |  | 302 |  |  |  | 249 |
|  |  | 15,376 |  |  |  | 18,549 |  |  |  | 18,456 |
Deferred provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (426 | ) |  |  | (70 | ) |  |  | (370 | )
State |  |  | (68 | ) |  |  | (84 | ) |  |  | (33 | )
Foreign |  |  | (496 | ) |  |  | (72 | ) |  |  | (557 | )
|  |  | (990 | ) |  |  | (226 | ) |  |  | (960 | )
Total provision |  | $ | 14,386 |  |  | $ | 18,323 |  |  | $ | 17,496 |
Deferred Tax Assets and Liabilities Significant components of the Company’s deferred tax assets and liabilities consist of the following:
|  | December 31,
|  | 2017 |  | 2016
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carry forward, foreign |  | $ | 959 |  |  | $ | 1,253 |
Stock-based compensation expense |  |  | 2,309 |  |  |  | 1,882 |
Foreign currency exchange |  |  | 265 |  |  |  | 677 |
Accrued expenses and other |  |  | 496 |  |  |  | 308 |
Inventory reserve |  |  | 740 |  |  |  | 640 |
Deferred tax assets |  | $ | 4,769 |  |  | $ | 4,760 |
|  | December 31,
|  | 2017 |  | 2016
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquisition-related Intangibles |  | $ | (2,743 | ) |  | $ | (2,932 | )
Depreciation |  |  | (7,419 | ) |  |  | (8,376 | )
Deferred tax liabilities |  | $ | (10,162 | ) |  | $ | (11,308 | )
Net deferred tax liabilities |  | $ | (5,393 | ) |  | $ | (6,548 | )
Tax Rate The reconciliation between the U.S. federal statutory rate and the Company’s effective rate is summarized as follows:
|  | Years ended December 31,
|  | 2017 |  | 2016 |  | 2015
Statutory federal income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State tax expense, net of federal benefit |  |  | 4.8 | % |  |  | 4.5 | % |  |  | 4.8 | %
Impact of rate change on deferred taxes |  |  | (4.9 | %) |  |  | 0.0 | % |  |  | 0.0 | %
Permanent items, including nondeductible expenses |  |  | 0.6 | % |  |  | 0.5 | % |  |  | (0.3 | %)
State investment tax credit |  |  | (0.7 | %) |  |  | (0.1 | %) |  |  | 0.0 | %
Federal, state and foreign research and development credits |  |  | (1.4 | %) |  |  | (0.9 | %) |  |  | (0.4 | %)
Foreign rate differential |  |  | 0.5 | % |  |  | (0.1 | %) |  |  | 0.1 | %
Domestic production deduction |  |  | (2.8 | %) |  |  | (2.9 | %) |  |  | (2.9 | %)
Effective income tax rate |  |  | 31.1 | % |  |  | 36.0 | % |  |  | 36.3 | %
As of December 31, 2017, the Company had NOL’s for income tax purposes in Italy of $4.0 million that do not expire. Accounting for Uncertainty in Income Taxes The Company had no unrecognized tax benefits for the years ended December 31, 2017 and 2016, respectively. The Company does not anticipate experiencing any significant increases or decreases in its unrecognized tax benefits within the twelve months following December 31, 2017. In the normal course of business, Anika and its subsidiaries may be periodically examined by various taxing authorities. We file income tax returns in the U.S. federal jurisdiction, in certain U.S. states, and in Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. The 2014 through 2016 tax years remain subject to examination by the IRS and other taxing authorities for U.S. federal and state tax purposes. The 2011 through 2016 tax years remain subject to examination by the appropriate governmental authorities for Italy. Upon the settlement of certain stock-based awards (i.e., exercise, vesting, forfeiture, or cancellation), the actual tax deduction is compared with cumulative financial reporting compensation cost, and any excess tax deduction related to these awards is considered a windfall tax benefit. With the adoption of ASU 2016 - 09 in 2017, the Company records windfall tax benefits to income tax expense. Prior to the adoption of ASU 2016 - 09, such benefits were tracked in a “windfall tax benefit pool” as part of additional paid-in capital. The Company follows the with-and-without approach for the direct effects of windfall/shortfall items and to determine the timing of the recognition of any related benefits. The Company recorded a windfall tax benefit in income tax expense of $0.4 million in 2017. The amount of excess tax benefits previously recognized through additional paid-in capital was $0.6 million and $0.9 million in 2016 and 2015, respectively.

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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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