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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes |
16) | Income Taxes
A reconciliation of the Company’s effective tax rate to the U.S. federal statutory rate is as follows:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
U.S. Federal income tax statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Federal tax credits |  |  | (1.8 | ) |  |  | — |  |  |  | (0.7 | )
State income taxes, net of federal benefit |  |  | 1.3 |  |  |  | 1.3 |  |  |  | 1.1 |
Effect of foreign operations taxed at various rates |  |  | 0.3 |  |  |  | (2.6 | ) |  |  | (4.1 | )
Qualified production activity tax benefit |  |  | (1.4 | ) |  |  | (0.5 | ) |  |  | (1.1 | )
Deferred tax asset valuation allowance |  |  | (0.7 | ) |  |  | 1.4 |  |  |  | 0.6 |
Income tax charges on accumulated foreign earnings |  |  | 10.9 |  |  |  | — |  |  |  | — |
Tax benefit related to reinstatement of tax incentives |  |  | (4.0 | ) |  |  | — |  |  |  | — |
Other |  |  | 0.1 |  |  |  | 1.5 |  |  |  | (0.5 | )
|  |  | 39.7 | % |  |  | 36.1 | % |  |  | 30.3 | %
The components of income from continuing operations before income taxes and the related provision for income taxes consist of the following:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Income from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 29,546 |  |  | $ | 28,652 |  |  | $ | 108,474 |
Foreign |  |  | 29,755 |  |  |  | 46,484 |  |  |  | 77,578 |
|  | $ | 59,301 |  |  | $ | 75,136 |  |  | $ | 186,052 |
Current taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 11,338 |  |  | $ | 14,745 |  |  | $ | 40,856 |
State |  |  | 1,159 |  |  |  | 783 |  |  |  | 2,602 |
Foreign |  |  | 14,117 |  |  |  | 7,760 |  |  |  | 5,314 |
|  |  | 26,614 |  |  |  | 23,288 |  |  |  | 48,772 |
Deferred taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | (1,730 | ) |  |  | 2,019 |  |  |  | 7,795 |
State and Foreign |  |  | (1,359 | ) |  |  | 1,800 |  |  |  | (246 | )
|  |  | (3,089 | ) |  |  | 3,819 |  |  |  | 7,549 |
Provision for income taxes |  | $ | 23,525 |  |  | $ | 27,107 |  |  | $ | 56,321 |
The significant components of the deferred tax assets and deferred tax liabilities are as follows:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |  |
Loss carry-forwards and credits |  | $ | 28,138 |  |  | $ | 29,032 |
Inventory and warranty reserves |  |  | 10,890 |  |  |  | 10,959 |
Accounts receivable and other accruals |  |  | 2,615 |  |  |  | 2,647 |
Stock-based compensation |  |  | 3,581 |  |  |  | 5,032 |
Executive supplemental retirement benefits |  |  | 8,026 |  |  |  | 6,132 |
Other |  |  | 63 |  |  |  | — |
Total deferred tax assets |  | $ | 53,313 |  |  | $ | 53,802 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquired intangible assets |  |  | (2,782 | ) |  |  | (5,857 | )
Depreciation and amortization |  |  | (5,085 | ) |  |  | (4,461 | )
Other |  |  | (1,202 | ) |  |  | (1,145 | )
Total deferred tax liabilities |  |  | (9,069 | ) |  |  | (11,463 | )
Valuation allowance |  |  | (27,102 | ) |  |  | (27,497 | )
Net deferred tax assets |  | $ | 17,142 |  |  | $ | 14,842 |
At December 31, 2013, the Company had gross Massachusetts research and other tax credit carry forwards of $8,689. These credit carry forwards will expire at various dates through 2028. In addition, at December 31, 2013, the Company had U.S. federal capital loss carry forwards of $59,275 that will expire in 2015. Although the Company believes that its tax positions are consistent with applicable U.S. federal, state and international laws, it maintains certain tax reserves at December 31, 2013 in the event its tax positions were to be challenged by the applicable tax authority and additional tax assessed on audit. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Balance at beginning of year |  | $ | 40,674 |  |  | $ | 36,540 |  |  | $ | 22,028 |
Decreases for prior years |  |  | — |  |  |  | — |  |  |  | (3 | )
Increases for the current year |  |  | 7,308 |  |  |  | 4,134 |  |  |  | 16,663 |
Reductions related to settlements with taxing authorities |  |  | — |  |  |  | — |  |  |  | (2,148 | )
Reductions related to expiration of statute of limitations |  |  | (298 | ) |  |  | — |  |  |  | — |
Balance at end of year |  | $ | 47,684 |  |  | $ | 40,674 |  |  | $ | 36,540 |
At December 31, 2013, the total amount of gross unrecognized tax benefits, which excludes interest and penalties, was approximately $47,684. The net increase from December 31, 2012 was primarily attributable to a current year increase in reserves for new and existing uncertain tax positions. At December 31, 2013, there are $24,758, excluding interest and penalties, of net unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. In 2013, the Company recorded a net benefit to income tax expense of $140, excluding interest and penalties, due to discrete reserve releases primarily related to statutes of limitations expiring. In 2011, the Company recorded a net benefit to income tax expense of $2,148, excluding interest and penalties, due to discrete reserve releases primarily related to the effective settlement of a German tax audit for years 2001 through 2005. The Company accrues interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are classified as a component of income tax expense. At December 31, 2013, 2012 and 2011, the Company had accrued interest on unrecognized tax benefits of approximately $2,159, $1,571 and $973, respectively. Over the next 12 months it is reasonably possible that the Company may recognize approximately $12,614 of previously net unrecognized tax benefits related to various U.S. federal, state and foreign tax positions as a result of the conclusion of various audits and the expiration of the statute of limitations. The Company is subject to examination by U.S. federal, state and foreign tax authorities. The Internal Revenue Service commenced an examination of its U.S. federal tax filings for open tax years 2007 through present during the quarter ended June 30, 2012. As a result, the U.S. statute of limitations remains open between tax years 2007 through present. The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2006 through present. On a quarterly basis, the Company evaluates both positive and negative evidence that affects the realizability of net deferred tax assets and assesses the need for a valuation allowance. The future benefit to be derived from its deferred tax assets is dependent upon its ability to generate sufficient future taxable income to realize the assets. During 2013, the Company decreased its valuation allowance by $395 primarily related to the expiration of US capital loss carry forwards. In 2012 we increased our valuation allowance by $1,022 primarily related to an increase in state tax credit carry forwards because the Company determined it is more likely than not that the deferred tax assets related to these attributes will not be realized. In 2011, the Company increased its valuation allowance by $1,208 primarily related to capital losses incurred from our foreign affiliates because we determined it is more likely than not that the deferred tax assets related to these attributes will not be realized. Through December 31, 2013, the Company has not provided deferred income taxes on the undistributed earnings of its foreign subsidiaries because such earnings were intended to be permanently reinvested outside the U.S. Determination of the potential deferred income tax liability on these undistributed earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs. At December 31, 2013, the Company had $440,841 of undistributed earnings in its foreign subsidiaries. During 2006, the Company received a notification letter from the Israeli Ministry of Industry Trade and Labor (“MITL”) indicating that its Israeli operations were in compliance with requirements relating to the tax holiday granted to its manufacturing operations in Israel in 2001. This tax holiday expired at December 31, 2011 and was subject to meeting continued investment, employment and other requirements under the guidelines of the MITL. This tax holiday resulted in income tax savings of approximately $1,000 and $2,700 for the years 2011 and 2010, respectively. Upon expiration of its tax holiday, the Company elected to be treated under a new preferential Israeli tax regime under which a tax rate of 10% applies for 2012, is reduced to 7% for 2013, and increased to 9% for 2014. The Company’s Israeli subsidiary is currently under examination for tax years 2009 through 2011 and expects the audit to be effectively settled during the quarter ended March 31, 2014. On September 13, 2013, the U.S. Department of the Treasury and Internal Revenue Service released final tangible property regulations that provide guidance on the tax treatment regarding the deduction and capitalization of expenditures related to tangible property. While early adoption is available, the effective date to implement these regulations is for tax years beginning on or after January 1, 2014. The Company is currently assessing these rules and the impact to its financial statements, if any, but believes adoption of these regulations will not have a material impact on its consolidated results of operations, cash flows or financial position. On January 2, 2013, the American Taxpayer Relief Act of 2012 reinstated certain tax incentives with retroactive application to January 1, 2012, the tax effect of which was recognized as a discrete event in the first quarter of 2013. Had the extension been enacted prior to January 1, 2013, our effective tax rate for 2012 would have been reduced by approximately 3%.

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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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
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