Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
6 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
12.

Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2018 was 26.9% and 26.4%, respectively, compared to 39.2% and 38.9% for the three and six months ended June 30, 2017, respectively. The Company provides for the effects of income taxes in interim financial statements based on the Company’s estimate of its annual effective tax rate for the full year, which is based on forecasted income by jurisdiction where the Company operates, adjusted for the tax effects of items that relate discretely to the period, if any.

The provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (in thousands):

 

     Three Months Ended June 30,  
     2018     2017  
     Amount     Rate     Amount      Rate  

Income tax expense at the federal statutory rate

   $ 6,368       21.0   $ 8,967        35.0

State income tax expense, net of federal benefit

     1,415       4.7     973        3.8

Effect of foreign operations

     (12     0.0     25        0.1

Windfall tax benefits, net related to stock-based compensation

     (28     (0.1 )%      —          —    

Change in valuation allowance

     74       0.2     62        0.2

Permanent items and other

     338       1.1     25        0.1
  

 

 

   

 

 

   

 

 

    

 

 

 
   $ 8,155       26.9   $ 10,052        39.2
  

 

 

   

 

 

   

 

 

    

 

 

 

 

     Six Months Ended June 30,  
     2018     2017  
     Amount     Rate     Amount     Rate  

Income tax expense at the federal statutory rate

   $ 11,474       21.0   $ 15,793       35.0

State income tax expense, net of federal benefit

     2,511       4.6     1,741       3.9

Effect of foreign operations

     (20     0.0     47       0.1

Windfall tax benefits, net related to stock-based compensation

     (245     (0.5 )%      (156     (0.4 )% 

Change in valuation allowance

     121       0.2     116       0.3

Permanent items and other

     616       1.1     13       —    
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 14,457       26.4   $ 17,554       38.9
  

 

 

   

 

 

   

 

 

   

 

 

 

On December 22, 2017, the Act was enacted, which significantly changed the U.S. corporate income tax laws by, among other items, reducing the U.S. corporate income tax rate to 21% from 35% starting in 2018, eliminating certain exceptions to Section 162(m) of the Internal Revenue Code and expanding the employees, companies and types of compensation covered by Section 162(m), and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result of the Act, the Company revalued its deferred taxes, net due to the changes in the U.S. corporate statutory federal income tax rate and recorded a net charge of $11.6 million in the provision for income taxes during the fourth quarter of 2017. Although the Company’s accounting for certain income tax effects of the Act is incomplete, it was determined that the $11.6 million charge is a reasonable estimate of those effects. As of June 30, 2018, this amount continues to be our best estimate of the impact of the Act in accordance with our understanding of the Act and the related guidance available. When the IRS issues additional guidance and regulations enabling the Company to finalize certain tax positions, the Company will be able to conclude whether any further adjustments are required to be made to its deferred tax assets, net balance as of December 31, 2017. Any adjustments to this provisional amount will be reported no later than the fourth quarter of 2018, as a component of the provision for income taxes in the reporting period in which any such adjustments are determined.