XML 42 R27.htm IDEA: XBRL DOCUMENT
v3.6.0.2

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES |
18. | INCOME TAXES:
The components of income before income taxes are as follows (in thousands):
|  | Year ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
United States |  | $ | 69,595 |  |  | $ | 54,338 |  |  | $ | 60,485 |
Foreign |  |  | (997 | ) |  |  | (21,279 | ) |  |  | (1,158 | )
Income before income tax |  | $ | 68,598 |  |  | $ | 33,059 |  |  | $ | 59,327 |
The components of the income tax expense are as follows (in thousands):
|  | Year ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current income tax benefit (expense): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (4,485 | ) |  | $ | (1,018 | ) |  | $ | — |
State |  |  | (47 | ) |  |  | (2 | ) |  |  | (2 | )
Foreign |  |  | (12,902 | ) |  |  | (10,224 | ) |  |  | (8,363 | )
|  |  | (17,434 | ) |  |  | (11,244 | ) |  |  | (8,365 | )
Deferred income tax (expense) benefit: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,683 | ) |  |  | (7,145 | ) |  |  | (9,652 | )
State |  |  | (503 | ) |  |  | 51 |  |  |  | 575 |
Foreign |  |  | 92 |  |  |  | (43 | ) |  |  | (31 | )
|  |  | (3,094 | ) |  |  | (7,137 | ) |  |  | (9,108 | )
Income tax expense |  | $ | (20,528 | ) |  | $ | (18,381 | ) |  | $ | (17,473 | )
Reconciliation of the statutory U.S. federal tax rate to the Company's effective tax rate is as follows:
|  | Year ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Statutory U.S. federal income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | 0.5 | % |  |  | (0.1 | )% |  |  | (0.4 | )%
Effect of foreign operations |  |  | 0.9 | % |  |  | 15.2 | % |  |  | 0.7 | %
Accruals and reserves |  |  | 3.2 | % |  |  | 0.0 | % |  |  | (4.5 | )%
Nondeductible employee compensation |  |  | 1.5 | % |  |  | 2.5 | % |  |  | 0.5 | %
Research tax credits |  |  | (1.3 | )% |  |  | (4.4 | )% |  |  | (2.5 | )%
Change in valuation allowance |  |  | (9.7 | )% |  |  | 8.4 | % |  |  | (0.4 | )%
Other |  |  | (0.2 | )% |  |  | (1.0 | )% |  |  | 1.0 | %
Effective tax rate |  |  | 29.9 | % |  |  | 55.6 | % |  |  | 29.4 | %
As of December 31, 2016, the Company had net operating loss and credit carry forwards. The Company’s net operating loss carry forwards below differ from the Company's accumulated deficit principally due to the timing of the recognition of certain revenues and expenses. A portion of the Company’s tax credit carry forwards relate to tax deductions from stock-based compensation. Pursuant to Internal Revenue Code (IRC) sections 382 and 383, utilization of the Company’s federal and state net operating loss and tax credit carry forwards could be subject to an annual limitation because of certain ownership changes. The following table summarizes Company tax loss and tax credit carry forwards for tax return purposes at December 31, 2016 (in thousands):
|  | Related Tax Deduction |  |  | Tax Benefit |  |  | Expiration Date
Loss carry forwards: |  |  |  |  |  |  |  |  |  |
Federal net operating loss |  | $ | — |  |  | $ | — |  |  |
Foreign net operating loss |  |  | 27,473 |  |  |  | 3,434 |  |  | n/a
Total loss carry forwards |  | $ | 27,473 |  |  | $ | 3,434 |  |  |
Tax credit carry forwards: |  |  |  |  |  |  |  |  |  |
Research tax credits |  | n/a |  |  | $ | 12,696 |  |  | 2027 to 2036
Foreign tax credits |  | n/a |  |  |  | 13,754 |  |  | 2023 to 2026
State research tax credits |  | n/a |  |  |  | 2,383 |  |  | 2023 to 2030
Total credit carry forwards |  | n/a |  |  | $ | 28,833 |  |  |
The table of carryforwards for tax return purposes includes $75.6 million (tax benefit of $26.9 million) related to excess tax benefits which are not currently included in deferred tax assets on the consolidated balance sheet and are not recognized until the deduction reduces taxes payable (see below). The tax loss and tax credit carryforwards for financial reporting purposes at December 31, 2016 were $3,434 of foreign net operating loss and $1,846 of state research credits. In the first quarter of 2017, the Company will adopt ASU No. 2016-09, Improvements to Employee Share-Based Accounting, which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Under current guidance, tax effects of deductions for employee share awards in excess of compensation cost ("windfalls") are recorded in equity in the period in which the deductions actually reduce income taxes payable and any unrecognized tax benefits are tracked separately off the balance sheet. Under the new guidance, excess tax benefits and deficiencies are to be recorded in the income statement in the period in which stock awards vest or are settled, and any excess tax benefits not previously recognized because the related tax deduction had not reduced current taxes payable, are to be recorded through a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption. The Company expects adoption of this standard to result in an increase of $26.9 million in deferred tax assets related to excess tax benefits not previously recognized because the related tax deductions had not reduced income taxes payable. The adjustment will be reflected as an increase to retained earnings as of January 1, 2017. Significant components of the Company's net deferred tax assets and liabilities are as follows (in thousands):
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax asset: |  |  |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 3,405 |  |  | $ | 3,716 |
Capitalized technology license |  |  | 4,163 |  |  |  | 3,922 |
Capitalized research expenditures |  |  | 8,100 |  |  |  | 10,206 |
Accruals and reserves |  |  | 1,112 |  |  |  | 3,275 |
Retirement plan |  |  | 9,723 |  |  |  | 8,062 |
Deferred revenue |  |  | 516 |  |  |  | 731 |
Tax credit carry forwards |  |  | 1,846 |  |  |  | 7,973 |
Stock-based compensation |  |  | 2,889 |  |  |  | 2,012 |
Other |  |  | 874 |  |  |  | 1,857 |
|  |  | 32,628 |  |  |  | 41,754 |
Valuation allowance |  |  | (7,950 | ) |  |  | (14,483 | )
Deferred tax assets |  |  | 24,678 |  |  |  | 27,271 |
Deferred tax liability: |  |  |  |  |  |  |  |
Acquisition goodwill |  |  | (185 | ) |  |  | — |
Deferred tax liabilities |  |  | (185 | ) |  |  | — |
Net deferred tax assets |  | $ | 24,493 |  |  | $ | 27,271 |
During 2016, the Company retained the valuation allowance that relates to UDC Ireland and New Jersey research and development credits, but released the valuation allowance related to U.S. foreign tax credits by $6.5 million based on reassessment and tax planning. During the years ended December 31, 2016, 2015 and 2014, the Company paid foreign taxes on South Korean royalty and license fee income of $12.4 million, $9.9 million and $8.3 million, respectively, which were recorded as current income tax expense. SDC has been required to withhold tax at a rate of 16.5% upon payment of royalties and license fees to the Company.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration