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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2014
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, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
U.S. Federal income tax statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Federal tax credits |  |  | (1.0 | ) |  |  | (1.8 | ) |  |  | — |
State income taxes, net of federal benefit |  |  | 2.0 |  |  |  | 1.3 |  |  |  | 1.3 |
Effect of foreign operations taxed at various rates |  |  | (7.3 | ) |  |  | 0.3 |  |  |  | (2.6 | )
Qualified production activity tax benefit |  |  | (1.8 | ) |  |  | (1.4 | ) |  |  | (0.5 | )
Deferred tax asset valuation allowance |  |  | (0.5 | ) |  |  | (0.7 | ) |  |  | 1.4 |
Release of income tax reserves (including interest) |  |  | (10.7 | ) |  |  | — |  |  |  | — |
Foreign tax credits in excess of taxes on foreign dividends |  |  | (1.0 | ) |  |  | — |  |  |  | — |
Income tax charges on accumulated foreign earnings |  |  | — |  |  |  | 10.9 |  |  |  | — |
Tax benefit related to reinstatement of tax incentives |  |  | — |  |  |  | (4.0 | ) |  |  | — |
Other |  |  | 0.4 |  |  |  | 0.1 |  |  |  | 1.5 |
|  |  | 15.1 | % |  |  | 39.7 | % |  |  | 36.1 | %
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, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Income from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 86,015 |  |  | $ | 29,546 |  |  | $ | 28,652 |
Foreign |  |  | 50,378 |  |  |  | 29,755 |  |  |  | 46,484 |
|  | $ | 136,393 |  |  | $ | 59,301 |  |  | $ | 75,136 |
Current taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 8,361 |  |  | $ | 11,338 |  |  | $ | 14,745 |
State |  |  | 1,124 |  |  |  | 1,159 |  |  |  | 783 |
Foreign |  |  | 5,866 |  |  |  | 14,117 |  |  |  | 7,760 |
|  |  | 15,351 |  |  |  | 26,614 |  |  |  | 23,288 |
Deferred taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | 8,908 |  |  |  | (1,730 | ) |  |  | 2,019 |
State and Foreign |  |  | (3,644 | ) |  |  | (1,359 | ) |  |  | 1,800 |
|  |  | 5,264 |  |  |  | (3,089 | ) |  |  | 3,819 |
Provision for income taxes |  | $ | 20,615 |  |  | $ | 23,525 |  |  | $ | 27,107 |
The significant components of the deferred tax assets and deferred tax liabilities are as follows:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |  |  |
Loss carry-forwards and credits |  | $ | 30,523 |  |  | $ | 28,138 |
Inventory and warranty reserves |  |  | 15,015 |  |  |  | 10,890 |
Accounts receivable and other accruals |  |  | 2,726 |  |  |  | 2,615 |
Stock-based compensation |  |  | 3,255 |  |  |  | 3,581 |
Executive supplemental retirement benefits |  |  | 3,321 |  |  |  | 8,026 |
Other |  |  | — |  |  |  | 63 |
Total deferred tax assets |  | $ | 54,840 |  |  | $ | 53,313 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquired intangible assets |  |  | (2,833 | ) |  |  | (2,782 | )
Depreciation and amortization |  |  | (6,537 | ) |  |  | (5,085 | )
Other |  |  | (2,002 | ) |  |  | (1,202 | )
Total deferred tax liabilities |  |  | (11,372 | ) |  |  | (9,069 | )
Valuation allowance |  |  | (26,763 | ) |  |  | (27,102 | )
Net deferred tax assets |  | $ | 16,705 |  |  | $ | 17,142 |
At December 31, 2014, the Company had gross Massachusetts research and other tax credit carry forwards of $8,762. These credit carry forwards will expire at various dates through 2028. In addition, at December 31, 2014, the Company had U.S. federal capital loss carry forwards of $59,275 that will expire in 2015. The Company recorded the benefit of a previously unavailable German net operating loss in 2014 as a result of a change in tax status of a German subsidiary. Starting in 2015, the Company will be able to utilize the net operating loss against the profits of the German subsidiary. The German net operating loss is approximately $9,869 and can be carried forward indefinitely. 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, 2014 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, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Balance at beginning of year |  | $ | 47,684 |  |  | $ | 40,674 |  |  | $ | 36,540 |
Decreases for prior years |  |  | (13 | ) |  |  | — |  |  |  | — |
Increases for the current year |  |  | 550 |  |  |  | 7,308 |  |  |  | 4,134 |
Reductions related to settlements with taxing authorities |  |  | (18,235 | ) |  |  | — |  |  |  | — |
Reductions related to expiration of statute of limitations |  |  | (10,376 | ) |  |  | (298 | ) |  |  | — |
Balance at end of year |  | $ | 19,610 |  |  | $ | 47,684 |  |  | $ | 40,674 |
At December 31, 2014, the total amount of gross unrecognized tax benefits, which excludes interest and penalties, was $19,610. The net decrease from December 31, 2013 was primarily attributable to current year releases in reserves for existing uncertain tax positions. At December 31, 2014, excluding interest and penalties, there are $11,533 of net unrecognized tax benefits that, if recognized, would affect the Company’s annual effective tax rate. In 2014, the Company recorded a net benefit to income tax expense of $13,380, excluding interest and penalties, due to the release of income tax reserves related to the expiration of the statute of limitations for a previously open tax year and the effective settlement of a U.S. and foreign income tax audit. 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, 2014, 2013 and 2012, the Company had accrued interest on unrecognized tax benefits of approximately $578, $2,159 and $1,571, respectively. Over the next 12 months it is reasonably possible that the Company may recognize approximately $134 of previously net unrecognized tax benefits related to various U.S. federal, state and foreign tax positions primarily as a result of the expiration of certain statutes of limitations. The Company is subject to examination by U.S. federal, state and foreign tax authorities. The United States Internal Revenue Service commenced an examination of the Company’s U.S. federal tax filings for open tax years 2007 through 2009 during the quarter ended June 30, 2012. This audit was effectively settled in the fourth quarter upon the receipt of an audit approval letter from the Joint Committee on Taxation. Due to the consents to extend the statute of limitation executed by the Company during the audit, the U.S. statue of limitations remains open for tax years 2007 through 2009 until December 31, 2015. The Company was notified of an audit of its U.S. federal tax filings for tax years 2011 through 2013 on February 3, 2015. The U.S. statute of limitations remains open between tax years 2011 through present. The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2008 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 2014, the Company decreased its valuation allowance by $339 primarily related to the effective settlement of a foreign tax audit. During 2013, the Company decreased its valuation allowance by $395 primarily related to the expiration of U.S. capital loss carry forwards. In 2012, the Company increased its 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. Through December 31, 2014, 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 and tax planning choices available when remittance occurs. At December 31, 2014, the Company had approximately $471,155 of undistributed earnings in its foreign subsidiaries which are considered to be indefinitely reinvested. The Company’s Israeli subsidiary elected to be treated under a preferential Israeli tax regime under which a reduced tax rate of 10% applied for 2012, was reduced to 7% for 2013, and increased to 9% for 2014 for a portion of its taxable income. The Company’s other operations in Israel are also taxed at a preferential rate under the tax regime at 16%. The Company’s Israeli subsidiary effectively settled an examination for tax years 2009 through 2011 during the quarter ended March 31, 2014.

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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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