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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Taxes | 12. Income Taxes (As Restated) The components of income before income taxes are as follows:
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (Amounts in thousands) |
|  | (As Restated) |  |  |  |  |  |  |
Domestic |  | $ | (24,888 | ) |  | $ | 153,446 |  |  | $ | 81,984 |
Foreign |  |  | 81,595 |  |  |  | 65,694 |  |  |  | 71,559 |
Income before income taxes |  | $ | 56,707 |  |  | $ | 219,140 |  |  | $ | 153,543 |
The components of the income tax provision are as follows:
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (Amounts in thousands) |
|  | (As Restated) |  |  |  |  |  |  |
Components of the income tax provision: |  |  |  |  |  |  |  |  |
Current |  | $ | 19,941 |  |  | $ | 34,800 |  |  | $ | 20,166 |
Deferred |  |  | 1,170 |  |  |  | (1,619 | ) |  |  | 5,086 |
Total |  | $ | 21,111 |  |  | $ | 33,181 |  |  | $ | 25,252 |
Jurisdictional components of the income tax provision: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,272 |  |  | $ | 17,662 |  |  | $ | 8,321 |
State |  |  | (26 | ) |  |  | 1,381 |  |  |  | 1,251 |
Foreign |  |  | 18,865 |  |  |  | 14,138 |  |  |  | 15,680 |
Total |  | $ | 21,111 |  |  | $ | 33,181 |  |  | $ | 25,252 |
At December 31, 2023, the Company had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $4.8 million, and foreign net operating loss carryforwards of $4.9 million. The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. At December 31, 2023, the Company had federal and state business tax credits carryforwards of $5.8 million available to reduce future federal and state income taxes. The business tax credit carryforwards will expire at various dates through 2043. The net operating loss and business tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant shareholders. The components of deferred income taxes are as follows:
|  | December 31, |
|  | 2023 |  |  | 2022 |
|  | (Amounts in thousands) |
Deferred tax assets: |  | (As Restated) |  |  | (As Revised) |
Stock-based compensation expense |  | $ | 5,120 |  |  | $ | 5,323 |
Operating leases |  |  | 30,727 |  |  |  | 31,564 |
Capitalized research and development |  |  | 17,568 |  |  |  | 9,102 |
Inventory |  |  | 10,131 |  |  |  | 5,983 |
Net operating loss carryforwards |  |  | 7,648 |  |  |  | 9,808 |
Business tax credit carryforwards |  |  | 5,531 |  |  |  | 2,639 |
Other |  |  | 7,063 |  |  |  | 6,061 |
Total deferred tax assets |  |  | 83,788 |  |  |  | 70,480 |
Less: valuation allowance |  |  | (20 | ) |  |  | (19 | )
Net deferred tax assets |  |  | 83,768 |  |  |  | 70,461 |
Deferred tax liabilities: |  |  |  |  |  |
Fixed assets |  |  | (17,716 | ) |  |  | (18,965 | )
Acquired intangible assets |  |  | (58,467 | ) |  |  | (45,170 | )
Operating lease right of use assets |  |  | (26,373 | ) |  |  | (28,486 | )
Debt discount |  |  | (19,006 | ) |  |  | — |
Total deferred tax liabilities |  |  | (121,562 | ) |  |  | (92,621 | )
Total net deferred tax liabilities |  | $ | (37,794 | ) |  | $ | (22,160 | )
The net change in the total valuation allowance for the year ended December 31, 2023 and 2022 was an increase of approximately $1,000 and a decrease of approximately $0.7 million, respectively. The reconciliation of the federal statutory rate to the effective income tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows:
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | Amount |  |  | % |  |  | Amount |  |  | % |  |  | Amount |  |  | % |
|  | (Amounts in thousands, except percentages) |
|  | (As Restated) |  |  | (As Restated) |  |  |  |  |  |  |  |  |  |  |  |  |
Income before income taxes |  | $ | 56,707 |  |  |  |  |  | $ | 219,140 |  |  |  |  |  | $ | 153,543 |  |  |  |
Expected tax at statutory rate |  |  | 11,910 |  |  |  | 21.0 | % |  |  | 46,020 |  |  |  | 21.0 | % |  |  | 32,247 |  |  |  | 21.0 | %
Adjustments due to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Difference between U.S. and foreign tax |  |  | 1,078 |  |  |  | 1.9 | % |  |  | 1,024 |  |  |  | 0.5 | % |  |  | 530 |  |  |  | 0.3 | %
State income taxes |  |  | 1,224 |  |  |  | 2.2 | % |  |  | 3,509 |  |  |  | 1.6 | % |  |  | 1,462 |  |  |  | 1.0 | %
Business tax credits |  |  | (4,522 | ) |  |  | (8.0 | %) |  |  | (5,139 | ) |  |  | (2.3 | %) |  |  | (2,239 | ) |  |  | (1.5 | %)
Stock-based compensation expense |  |  | (2,461 | ) |  |  | (4.3 | %) |  |  | (5,638 | ) |  |  | (2.6 | %) |  |  | (9,049 | ) |  |  | (5.9 | %)
U.S. taxation of foreign earnings |  |  | 539 |  |  |  | 1.0 | % |  |  | 83 |  |  |  | 0.0 | % |  |  | 30 |  |  |  | 0.0 | %
Foreign-derived intangible income |  |  | — |  |  |  | 0.0 | % |  |  | (5,042 | ) |  |  | (2.3 | %) |  |  | (2,547 | ) |  |  | (1.7 | %)
Executive compensation |  |  | 3,084 |  |  |  | 5.4 | % |  |  | 5,441 |  |  |  | 2.5 | % |  |  | 3,397 |  |  |  | 2.2 | %
Contingent consideration |  |  | (6,412 | ) |  |  | (11.3 | %) |  |  | (6,033 | ) |  |  | (2.8 | %) |  |  | 1,232 |  |  |  | 0.8 | %
Loss on extinguishment of debt |  |  | 2,634 |  |  |  | 4.6 | % |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Debt discount |  |  | 16,650 |  |  |  | 29.4 | % |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Foreign exchange loss |  |  | (2,288 | ) |  |  | (4.0 | %) |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Uncertain tax provisions |  |  | 165 |  |  |  | 0.3 | % |  |  | 234 |  |  |  | 0.1 | % |  |  | (443 | ) |  |  | (0.3 | %)
Change in valuation allowance |  |  | — |  |  |  | 0.0 | % |  |  | (688 | ) |  |  | (0.3 | %) |  |  | (48 | ) |  |  | (0.0 | %)
Return to provision adjustments |  |  | (1,255 | ) |  |  | (2.2 | %) |  |  | (498 | ) |  |  | (0.2 | %) |  |  | (50 | ) |  |  | (0.0 | %)
Other |  |  | 765 |  |  |  | 1.2 | % |  |  | (92 | ) |  |  | (0.0 | %) |  |  | 730 |  |  |  | 0.5 | %
Income tax provision |  | $ | 21,111 |  |  |  | 37.2 | % |  | $ | 33,181 |  |  |  | 15.1 | % |  | $ | 25,252 |  |  |  | 16.4 | %
The Company’s tax returns are subject to examination by federal, state and foreign tax authorities. The Company’s two major tax jurisdictions are subject to examination for the following periods:
Jurisdiction |  | Fiscal Years Subject to Examination
United States - federal and state |  | 2019-2023
Sweden |  | 2018-2023
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
|  | For the Years Ended December 31, |
|  | 2023 |  |  | 2022 |
|  | (Amounts in thousands) |
Balance of gross unrecognized tax benefits, beginning of period |  | $ | 2,996 |  |  | $ | 2,786 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in the current period |  |  | 178 |  |  |  | 146 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in the prior period |  |  | 53 |  |  |  | 64 |
Gross amounts of decreases due to release |  |  | (88 | ) |  |  | — |
Balance of gross unrecognized tax benefits, end of period |  | $ | 3,139 |  |  | $ | 2,996 |
Included in the balance of unrecognized tax benefits as of December 31, 2023, are $3.1 million of tax benefits that, if recognized, would affect the effective tax rate. The Company classifies interest and penalties related to income taxes as components of its income tax provision. In 2023, a net expense of approximately $15,000, was recorded to the income tax provision related to interest and penalties while in 2022, a net expense of approximately $24,000 was recorded. The amount of interest and penalties recorded in the accompanying consolidated balance sheets was approximately $67,000 and $52,000 as of December 31, 2023 and 2022, respectively. In the next twelve months, it is reasonably possible the Company will reduce its gross unrecognized tax benefits, excluding interest by up to $1.1 million due to expiring statutes of limitations. In 2021, the Organization of Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Sharing with the goal of achieving consensus around substantial changes to international tax policies, including the implementation of a minimum global effective tax rate of 15%. We continue to evaluate the impacts of enacted legislation and pending legislation in the tax jurisdictions in which we operate. While various countries have implemented the legislation as of January 1, 2024, we do not expect a resulting material change to our income tax provision for the 2024 fiscal year. As of December 31, 2023, the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $212.4 million. Because $5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act enacted in December 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. At December 31, 2023, the Company has not provided for taxes on outside basis differences of its foreign subsidiaries as it is not practicable and the Company has the ability and intent to indefinitely reinvest the undistributed earnings of its foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict its plan to indefinitely reinvest.

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