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INCOME TAXES | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES: | 20. INCOME TAXES: The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was 17.9% and 4.4% for the three months ended September 30, 2024 and 2023, respectively, and 18.8% and 16.8% for the nine months ended September 30, 2024 and 2023, respectively. The Company recorded an income tax expense of $14.5 million and $2.4 million for the three months ended September 30, 2024 and 2023, respectively, and $40.7 million and $28.5 million for the nine months ended September 30, 2024 and 2023, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to the benefit of income taxed in foreign jurisdictions partially offset by nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). During the third quarter of 2023, a change in the U.S. tax regulations associated with the ability to credit Chinese withholding taxes, as well as a change in the capitalization rules for research and development expenses resulted in a decrease in the effective income tax rate for the three months ended September 30, 2023. 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. During the nine months ended September 30, 2024, the Company recognized an unrealized gain of $4.1 million on available-for-sale securities. The valuation allowance of $1.7 million that resulted from an unrealized loss on available-for-sale securities during prior periods was reversed through accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. There are no indicators against the realizability of the remaining net deferred tax asset. 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 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 18, 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 $59.7 million and $60.1 million as of September 30, 2024, and December 31, 2023, respectively for the receipt of the Korean withholding tax. The Company also recorded foreign exchange gain of $3.2 million and foreign exchange loss of $1.5 million for the three months ended September 30, 2024 and 2023, respectively, and foreign exchange loss of $545,000 and $3.3 million for the nine months ended September 30, 2024 and 2023, respectively, 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 as of September 30, 2024 and December 31, 2023, 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 2020. 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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