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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes [Abstract] |
Income Taxes | NOTE 1 2. INCOME TAXES ﻿ The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the estimated future tax effects of temporary differences between book and tax treatment of assets and liabilities and carryforwards to the extent they are realizable. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, a reduction of the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, a reduction to the deferred tax asset would be charged to income in the period such determination was made. ﻿ We record a liability for uncertain tax positions that do not meet the more likely than not standard as prescribed by the authoritative guidance for income tax accounting. We record tax benefits for only those positions that we believe will more likely than not be sustained. Unrecognized tax benefits are the differences between tax positions taken, or expected to be taken, in tax returns, and the benefits recognized for accounting purposes. ﻿ Significant judgment is required in determining our worldwide provision for income taxes and our income tax filings are regularly under audit by tax authorities. Any audit result differing from amounts recorded would increase or decrease income in the period that we determine such adjustment is likely. Interest expense and penalties associated with the underpayment of income taxes are included in income tax expense. ﻿ Earnings before income taxes were as follows (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ |  | 2016 |  |  | 2015 |  |  | 2014 |
﻿ |  |  |  |  |  |  |  |  |
﻿Domestic | $ | 227,875 |  | $ | 187,200 |  | $ | 148,510 |
﻿International |  | 93,971 |  |  | 85,941 |  |  | 98,045 |
﻿ | $ | 321,846 |  | $ | 273,141 |  | $ | 246,555 |
﻿ The provision (benefit) for income taxes comprised the following (in thousands):
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ |  | 2016 |  |  | 2015 |  |  | 2014 |
﻿Current |  |  |  |  |  |  |  |  |
﻿Federal | $ | 53,285 |  | $ | 52,966 |  | $ | 39,713 |
﻿State |  | 6,608 |  |  | 5,353 |  |  | 4,692 |
﻿International |  | 19,291 |  |  | 17,681 |  |  | 20,213 |
﻿ |  | 79,184 |  |  | 76,000 |  |  | 64,618 |
﻿Deferred |  |  |  |  |  |  |  |  |
﻿Federal |  | 20,305 |  |  | 5,762 |  |  | 2,301 |
﻿State |  | 1,196 |  |  | 526 |  |  | 33 |
﻿International |  | (893) |  |  | (1,282) |  |  | (2,348) |
﻿ |  | 20,608 |  |  | 5,006 |  |  | (14) |
﻿ | $ | 99,792 |  | $ | 81,006 |  | $ | 64,604 |
﻿ The provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate as follows: ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ |  | 2016 |  |  | 2015 |  |  | 2014 |
﻿ |  |  |  |  |  |  |  |  |
﻿U.S. federal statutory rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
﻿State income tax, net of federal tax benefit |  | 1.8 |  |  | 1.6 |  |  | 1.5 |
﻿International income taxes |  | (4.8) |  |  | (5.3) |  |  | (7.0) |
﻿Domestic manufacturing exclusions |  | (1.0) |  |  | (1.5) |  |  | (1.2) |
﻿Research and development credit |  | (0.8) |  |  | (1.2) |  |  | (1.3) |
﻿Other, net |  | 0.8 |  |  | 1.1 |  |  | (0.8) |
﻿Effective tax rate |  | 31.0 | % |  | 29.7 | % |  | 26.2 | %
﻿ Our effective income tax rate was 31.0 percent for the year ended December 31, 201 6, and 29.7 percent for the year ended December 31, 201 5. The increase in our effective income tax rate for the year ended December 31, 2016, as compared to the year ended December 31, 2015, was primarily related to a change in earnings mix in 2016, with relatively higher earnings subject to domestic tax rates as opposed to lower international tax rates including the impact of foreign currency exchange rates. ﻿ Our effective income tax rate was 29.7 percent for the year ended December 31, 201 5, and 26.2 percent for the year ended December 31, 2014. The increase in our effective income tax rate for the year ended December 31, 2015, as compared to the year ended December 31, 2014, was related to lower relative earnings subject to international tax rates that are lower than domestic tax rates, including the impact of foreign currency exchange rates, as well as a non-recurring benefit recognized during period ended December 31, 2014, related to the deferral of inter-company profits that were included in prior year tax provisions in error, which is not material to prior interim or annual periods. ﻿ Income taxes paid for the periods ended December 31, 2016, 2015 and 2014 was $74.7 million, $54.9 million, and $60.2 million, respectively. ﻿ We have business operations in Switzerland and the Netherlands and have been granted tax rulings by each jurisdiction. Our Netherlands ruling is set to expire on December 31, 2022 and our Switzerland ruling remains in effect as long as our business operations comply with the ruling requirements during the period or until Switzerland finalizes the implementation dates of new international tax rules. Prior to the year ended December 31, 2016 we benefited from a Switzerland ruling which expired December 31, 2015. ﻿ As a result of the tax rulings, our net income was higher by $7.8 million for the year ended December 31, 2016, $8.5 million for the year ended December 31, 2015, and $8.5 million for the year ended December 31, 2 01 4. The benefit from these tax rulings is reflected within the overall benefit received from international income taxes in the table above. ﻿ We consider the majority of the operating earnings of non-U.S. subsidiaries to be indefinitely invested outside the U.S. The cumulative earnings of these subsidiaries were $546.7 million at December 31, 201 6. No provision has been made for U.S. federal and state, or international taxes that may result from future remittances of the undistributed earnings of non-U.S. subsidiaries. Should we repatriate these earnings in the future, we would have to adjust the income tax provision in the period in which the decision to repatriate earnings is made. A determination of the related tax liability that would be paid on these undistributed earnings if repatriated is not practicable for several reasons including the complexity of laws and regulations in the various jurisdictions where we operate, the varying tax treatment of potential repatriation scenarios and the timing of any future repatriation. For the operating earnings not considered to be indefinitely invested outside the U.S., we have accounted for the tax impact on a current basis. ﻿ The components of the net deferred tax assets (liabilities) included in the accompanying consolidated balance sheets are as follows (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿ |  | December 31, 2016 |  | December 31, 2015 |
﻿ |  |  | Long-Term |  |  | Current |  |  | Long-Term |
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿Assets |  |  |  |  |  |  |  |  |  |  |
﻿Accrued expenses |  |  | $ | 22,145 |  | $ | 23,298 |  | $ | 5,329 |
﻿Accounts receivable reserves |  |  |  | 2,715 |  |  | 2,973 |  |  | - |
﻿Deferred revenue |  |  |  | 13,400 |  |  | 7,392 |  |  | 3,656 |
﻿Inventory basis differences |  |  |  | 3,959 |  |  | 3,292 |  |  | 293 |
﻿Property-based differences |  |  |  | 1,382 |  |  | - |  |  | 1,524 |
﻿Share-based compensation |  |  |  | 13,021 |  |  | 2,565 |  |  | 10,580 |
﻿Other |  |  |  | 678 |  |  | 234 |  |  | 361 |
﻿Net operating loss carryforwards |  |  |  | 4,182 |  |  | 65 |  |  | 4,059 |
﻿Unrealized losses on foreign currency exchange contracts, interest rate swaps and investments |  |  |  | 148 |  |  | - |  |  | 53 |
﻿Total assets |  |  |  | 61,630 |  |  | 39,819 |  |  | 25,855 |
﻿Valuation allowance |  |  |  | (4,891) |  |  | (507) |  |  | (3,939) |
﻿Total assets, net of valuation allowance |  |  |  | 56,739 |  |  | 39,312 |  |  | 21,916 |
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿Liabilities |  |  |  |  |  |  |  |  |  |  |
﻿Accrued expenses |  |  |  | (143) |  |  | - |  |  | - |
﻿Accounts receivable reserves |  |  |  | (85) |  |  | - |  |  | - |
﻿Deferred revenue |  |  |  | (36) |  |  |  |  |  | - |
﻿Deferred instrument costs |  |  |  | (24,142) |  |  | - |  |  | (16,090) |
﻿Property-based differences |  |  |  | (43,159) |  |  | - |  |  | (35,079) |
﻿Intangible asset basis differences |  |  |  | (17,672) |  |  | - |  |  | (17,109) |
﻿Other |  |  |  | (507) |  |  | (550) |  |  | (1,460) |
﻿Unrealized gains on foreign currency exchange contracts, interest rate swaps and investments |  |  |  | (4,575) |  |  | (882) |  |  | - |
﻿Total liabilities |  |  |  | (90,319) |  |  | (1,432) |  |  | (69,738) |
﻿Net deferred tax assets (liabilities) |  |  | $ | (33,580) |  | $ | 37,880 |  | $ | (47,822) |
﻿ During the first quarter of 2016, the Company early adopted FASB amendments which require us to classify all deferred tax assets and liabilities as noncurrent within our condensed consolidated balance sheet. In accordance with the FASB’s permitted transition guidance, we applied this guidance prospectively and did not revise our prior period balance sheet presentation for the effects of this amendment. ﻿ We record a liability for uncertain tax positions that do not meet the more likely than not standard as prescribed by the authoritative guidance for income tax accounting. We record tax benefits for only those positions that we believe will more likely than not be sustained. Unrecognized tax benefits are the differences between tax positions taken, or expected to be taken, in tax returns, and the benefits recognized for accounting purposes. We classify certain uncertain tax positions as long-term liabilities. ﻿ The total amount of unrecognized tax benefits at December 31, 201 6, a nd December 31, 201 5, was $18.5 million and $7.2 million, respectively. Of the total unrecognized tax benefits at December 31, 201 6 and 201 5, $5.9 million and $5.9 million, respectively, comprise unrecognized tax positions that woul d, if recognized, affect our effective tax rate. The increase in net liability is primarily related to two uncertain tax positions taken during the year. The first relates to our claiming certain tax deductions under a recent court case, but one that the IRS has vowed to appeal. The second relates to certain changes we made in our transfer pricing policies to better align statutory accounting with business operations. The ultimate deductibility of the remaining unrecognized tax positions is highly certain but there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. ﻿ During each of the years ended December 31, 201 6, 201 5 and 201 4, we recorded interest expense and penalties of $0.3 million as income tax expense in our consolidated statement of income. At December 31, 201 6 and 201 5, we had $0.6 million and $0.6 million, respectively, of estimated interest expense and penalties accrued in our consolidated balance sheets. ﻿ The following table summarizes the changes in unrecognized tax benefits during the years ended December 31, 201 6, 201 5 and 201 4 (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |
﻿ | For the Years Ended December 31, |
﻿ |  | 2016 |  |  | 2015 |  |  | 2014 |
﻿ |  |  |  |  |  |  |  |  |
﻿Total amounts of unrecognized tax benefits, beginning of period | $ | 7,204 |  | $ | 5,942 |  | $ | 6,325 |
﻿Gross increases in unrecognized tax benefits as a result of tax positions taken during a prior period |  | 75 |  |  | 47 |  |  | 432 |
﻿Gross increases in unrecognized tax benefits as a result of tax positions taken in the current period |  | 12,657 |  |  | 1,569 |  |  | 1,789 |
﻿Decreases in unrecognized tax benefits relating to settlements with taxing authorities |  | (1,326) |  |  | - |  |  | (2,242) |
﻿Decreases in unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations |  | (147) |  |  | (354) |  |  | (362) |
﻿Total amounts of unrecognized tax benefits, end of period | $ | 18,463 |  | $ | 7,204 |  | $ | 5,942 |
﻿ In the ordinary course of our business, our income tax filings are regularly under audit by tax authorities. While we believe we have appropriately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater or less than our accrued position. Accordingly, additional provisions on income tax matters, or reductions of previously accrued provisions, could be recorded in the future as we revise our estimates due to changing facts and circumstances or the underlying matters are settled or otherwise resolved. We are currently under tax examinations by various state and international tax authorities. We anticipate that these examinations will be concluded within the next year. With few exceptions, we are no longer subject to income tax examinations in any state and local, or international jurisdictions in which we conduct significant taxable activities for years before 2008. ﻿ At December 31, 201 6, we had net operating loss carryforwards in certain state and international jurisdictions of approximately $21.7 million available to offset future taxable income. Most of these net operating loss carryforwards will expire at various dates through 2018 and the remainder have indefinite lives. We have recorded a valuation allowance of $4.9 million against certain deferred tax assets related to temporary differences including net operating loss carryforwards, as it is more likely than not that they will not be realized or utilized within the carryforward period.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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