Note 14 - Income Taxes

9 Months Ended

Sep. 30, 2019

14.	Income Taxes

The provision for income taxes was

$3.3

million and

$7.8

million for the

three

- and

nine

-month periods ended

September 30, 2019,

based on effective tax rates of

26.6%

and

25.3%,

respectively. The provision for income taxes was

$1.5

million and

$1.9

million for the

three

- and

nine

-month periods ended

September 30, 2018,

based on effective tax rates of

16.4%

and

14.7%,

respectively. The net increase in the effective tax rate for the

three

- and

nine

- month periods ended

September 30, 2019,

as compared to the same periods in

2018,

was primarily due to the windfall tax benefit the Company realized in

June 2018

related to exercises of employee equity awards offset by the limitation on the deductibility of executive compensation for accelerated stock vesting upon the retirement of the Company’s former Chief Executive Officer on

March 9, 2018.

In addition, the Company recorded a

$0.3

million and

$0.4

million tax shortfall for the

three

- and

nine

-month periods ended

September 30, 2019

related to exercises of employee equity awards.

The Company files income tax returns in the United States on a federal basis, 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.

In connection with the preparation of the financial statements, the Company assesses whether it was more likely than

not

that it would be able to utilize, in future periods, the net deferred tax assets associated with its net operating loss carry-forward. The Company has concluded that the positive evidence outweighs the negative evidence and, thus, the deferred tax assets

not

otherwise subject to a valuation allowance are realizable on a “more likely than

not”

basis. As such, the Company did

not

record a valuation allowance as of

September 30, 2019

December 31, 2018.