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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 20. INCOME TAXES: The components of income before income taxes are as follows (in thousands):
|  | Year ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
United States |  | $ | 71,514 |  |  | $ | 77,205 |  |  | $ | 60,066 |
Foreign |  |  | 173,657 |  |  |  | 191,025 |  |  |  | 168,181 |
Income before income taxes |  | $ | 245,171 |  |  | $ | 268,230 |  |  | $ | 228,247 |
The components of the income tax expense are as follows (in thousands):
|  | Year ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current income tax (expense) benefit: |  |  |  |  |  |  |  |  |
Federal |  | $ | (15,848 | ) |  | $ | (51,980 | ) |  | $ | (16,433 | )
State |  |  | (3,048 | ) |  |  | (1,833 | ) |  |  | (641 | )
Foreign |  |  | (27,030 | ) |  |  | (31,302 | ) |  |  | (25,212 | )
|  |  | (45,926 | ) |  |  | (85,115 | ) |  |  | (42,286 | )
Deferred income tax (expense) benefit: |  |  |  |  |  |  |  |  |
Federal |  |  | (460 | ) |  |  | 25,916 |  |  |  | (844 | )
State |  |  | 3,936 |  |  |  | 1,216 |  |  |  | (734 | )
Foreign |  |  | 290 |  |  |  | (186 | ) |  |  | (170 | )
|  |  | 3,766 |  |  |  | 26,946 |  |  |  | (1,748 | )
Income tax expense |  | $ | (42,160 | ) |  | $ | (58,169 | ) |  | $ | (44,034 | )
Reconciliation of the statutory U.S. federal tax rate to the Company's effective tax rate is as follows:
|  | Year ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Statutory U.S. federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Effect of foreign operations |  |  | (4.0 | ) |  |  | (4.9 | ) |  |  | (5.0 | )
U.S. International Tax (Sub F, GILTI, FDII) |  |  | 2.9 |  |  |  | 4.2 |  |  |  | 2.1 |
Research tax credits |  |  | (2.4 | ) |  |  | (1.9 | ) |  |  | (1.4 | )
Redetermination of foreign tax credit utilization |  |  | (2.0 | ) |  |  | — |  |  |  | — |
Nondeductible employee compensation |  |  | 1.7 |  |  |  | 1.9 |  |  |  | 3.0 |
State income taxes, net of federal benefit |  |  | (0.2 | ) |  |  | 0.1 |  |  |  | 0.2 |
Stock based compensation |  |  | 0.1 |  |  |  | 0.2 |  |  |  | (0.3 | )
Accruals and reserves |  |  | — |  |  |  | — |  |  |  | (0.8 | )
Other |  |  | 0.1 |  |  |  | 1.1 |  |  |  | 0.5 |
Effective tax rate |  |  | 17.2 | % |  |  | 21.7 | % |  |  | 19.3 | %
The following table summarizes Company tax credit carry forwards for tax return purposes as of December 31, 2023 (in thousands):
|  | Tax Benefit |  |  | Expiration Date
Tax credit carry forwards: |  |  |  |  |
State research tax credits |  | $ | 8,752 |  |  | 2034-2038
Foreign tax credits |  | $ | 186 |  |  | 2031
Total credit carry forwards |  | $ | 8,938 |  |  |
Significant components of the Company's net deferred tax assets and liabilities are as follows (in thousands):
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred tax asset: |  |  |  |  |  |
Capitalized research expenditures |  | $ | 39,459 |  |  | $ | 38,485 |
Retirement plan |  |  | 12,555 |  |  |  | 13,495 |
Tax credit carry forwards |  |  | 8,938 |  |  |  | 8,100 |
Accruals and reserves |  |  | 7,180 |  |  |  | 6,944 |
Lease Liabilities |  |  | 6,671 |  |  |  | 7,230 |
Deferred revenue |  |  | 1,741 |  |  |  | 2,077 |
Stock-based compensation |  |  | 1,498 |  |  |  | 1,454 |
Other |  |  | 1,362 |  |  |  | 3,400 |
|  |  | 79,404 |  |  |  | 81,185 |
Valuation allowance |  |  | (9,551 | ) |  |  | (11,087 | )
Deferred tax assets |  |  | 69,853 |  |  |  | 70,098 |
Deferred tax liability: |  |  |  |  |  |
Lease Assets |  |  | (6,302 | ) |  |  | (6,944 | )
Acquisition Goodwill |  |  | (1,549 | ) |  |  | (1,283 | )
Other |  |  | (2,894 | ) |  |  | (3,710 | )
Deferred tax liabilities |  |  | (10,745 | ) |  |  | (11,937 | )
Net deferred tax assets |  | $ | 59,108 |  |  | $ | 58,161 |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. As part of its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is not sufficient evidence to release the valuation allowance that has been recorded for the New Jersey research and development credits and unrealized loss on investments. There are no indicators against the realizability of the remaining net deferred tax asset. The U.S.-Korean Mutual Agreement Procedure (MAP) for the years ended December 31, 2010, to December 31, 2017, was closed in September 2022, resulting in a refund of the Korean withholding taxes previously withheld. The Company filed amended U.S. federal tax returns to reflect the refund and to redetermine the foreign tax credit amount. As a result, the Company has recorded a long-term asset of $3.0 million in the year ended December 31, 2022. There was no long-term asset recorded for the year ended December 31, 2023. On December 27, 2018, the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are considered Korean source income and subject to Korean withholding tax under the applicable law and interpretation of the Korea-U.S. Tax Treaty. The Company has incurred Korean withholding tax of $14.9 million for each of the years ended December 31, 2018, through December 31, 2022. Based on the Korean Supreme Court decision, a tax refund request on behalf of the Company was or will be filed with the Korean National Tax Service (KNTS) for the entire period from January 1, 2018, to December 31, 2022. The Company received a formal rejection from the KNTS; and in May 2022 filed an appeal with the Korean Tax Tribunal. On December 18th, 2023, the Company received a formal rejection from the Tax Tribunal. Anticipating the rejection of the appeal, in September 2023 the Company filed a petition to the District Court and is awaiting its decision. The Company has been advised by a prominent Korean law firm that there is a more-likely-than-not chance of success. As a result, the Company has recorded a long-term asset of $60.1 million and $60.9 million as of December 31, 2023, and December 31, 2022, respectively for the receipt of the Korean withholding tax. The Company also recorded foreign exchange loss of $732,000 during the year ended December 31, 2023, due to the fluctuation of the Korean Won to the U.S. Dollar and resulting remeasurement of this Won-denominated receivable. The Company will amend U.S. federal tax returns for the 2018 to 2022 years when the anticipated refund from KNTS is received to offset the additional tax liability. The Company has recorded a long-term liability of $15.7 million and $14.6 million as of December 31, 2023, and December 31, 2022, respectively, for the estimated amounts due to the U.S. federal government based on the amendment of the Company's U.S. tax returns, indicating that lower withholding amounts were required. The Company is not subject to examinations by the federal tax authority for the years prior to 2017. The Company's state and foreign tax returns are open for a period of generally three to four years. The Company is under California tax audit for 2019 and 2020 years, which is in the information-collecting stage. The above estimates may change in the future and upon settlement.

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