Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13.

    

Income Taxes:

The components of the Company’s provision (benefit) for income taxes from continuing operations were as follows:

	As of December 31,
(in thousands)	2018		2017			2016
Current:
Federal	$	9,188	$	7,695		$	2,563
State and local		1,797		666			929
		10,985		8,361			3,492
Deferred		1,320		(10,974	)		(1,994	)
Income tax provision (benefit)	$	12,305	$	(2,613	)	$	1,498

The components of the Company’s deferred income taxes at

December 31

are as follows:

(in thousands)	2018			2017
Deferred tax assets:
Inventory (excluding LIFO reserve)	$	1,622		$	1,690
Net operating loss and tax credit carryforwards		2,498			3,520
Allowance for doubtful accounts		504			419
Accrued expenses		6,087			5,684
Other		232			143
Deferred tax assets before valuation allowance		10,943			11,456
Valuation allowance		(2,055	)		(2,379	)
Total deferred tax assets		8,888			9,077
Deferred tax liabilities:
LIFO reserve		(3,870	)		(3,958	)
Property and equipment		(13,625	)		(11,363	)
Intangibles		(4,858	)		(5,901	)
Total deferred tax liabilities		(22,353	)		(21,222	)
Deferred tax liabilities, net	$	(13,465	)	$	(12,145	)

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

(in thousands)	2018			2017			2016
Balance as of January 1	$	40		$	38		$	38
Change in tax due to tax law		(12	)		-			-
Increases related to current year tax positions		9			15			13
Decreases related to lapsing of statute of limitations		(10	)		(13	)		(13	)
Balance as of December 31	$	27		$	40		$	38

It is expected that the amount of unrecognized tax benefits will

not

materially change in the next

twelve

months. The tax years

2015

through

2017

remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in income tax expense.

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

	2018			2017			2016
U.S. federal statutory rate in effect		21.0	%		35.0	%		35.0	%
State and local taxes, net of federal benefit		4.6	%		3.6	%		11.8	%
Sec. 199 manufacturing deduction		-			(3.8	%)		(33.6	%)
Meals and entertainment		0.6	%		1.8	%		64.3	%
Tax credits		(0.6	%)		(1.3	%)		(48.7	%)
Change in valuation allowance		-			0.6	%		205.4	%
Change in U.S. federal statutory rate		-			(37.7	%)		-
Change in tax affect of SERP		-			(11.4	%)		-
All other, net		1.1	%		(2.8	%)		122.4	%
Effective income tax rate		26.7	%		(16.0	%)		356.6	%

On

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from

35%

to

21%

effective

January 1, 2018.

Consequently, the Company decreased its net deferred tax liability as of

December 31, 2017

by

$6.2

million resulting in an income tax benefit to reflect the estimated impact of the Tax Act.  Based on the Company’s predominantly U.S. based operational footprint, additional international and minimum tax provisions under the Tax Act, including the

one

-time transition tax for the transition from the worldwide system to the territorial system, are

not

applicable, or would

not

be material to the Company.

In

2017,

the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section

162

(m) limitations in prior years.  Due to the mandatory waiting period of

six

months prior to any SERP payment distribution, in

2017

the Company determined that the Section

162

(m) non-deductibility limitations did

not

apply.  The adjustment, which had accumulated since the inception of the SERP in

2005,

resulted in an increase to after-tax income of

$1.9

million in

2017.

  The Company determined that this adjustment was

not

material to its current or prior period consolidated financial statements. 

The calculation of the impact as a result of the reduced U.S. corporate income tax rate is complete The effective tax rate in

2018

of

26.7%

is in line with management expectations based on interpretations of the Tax Act.

The Company's effective tax rate was disproportionately high in

2016

from comparative periods due to low income before taxes relative to items that impact the effective tax rate.  During

2016,

the Company recorded a valuation allowance of

$0.9

million to reduce certain state deferred tax assets to the amount that is more likely than

not

to be realized.

Income taxes paid in

2018,

2017

and

2016

totaled

$11.3

million,

$9.4

million and

$1.0

million, respectively. Some subsidiaries of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss carryforwards expiring over the next

two

to

20

years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than

not

to be realized.