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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
14. | Income Taxes:
The components of income tax expense are as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (27 | ) |  | $ | 4,423 |  |  | $ | 6,020 |
State |  |  | 88 |  |  |  | 1,038 |  |  |  | 507 |
Foreign |  |  | 1,548 |  |  |  | 626 |  |  |  | 3,159 |
|  |  | 1,609 |  |  |  | 6,087 |  |  |  | 9,686 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (4,730 | ) |  |  | 1,961 |  |  |  | 17,034 |
State |  |  | 506 |  |  |  | (73 | ) |  |  | 643 |
Foreign |  |  | 108 |  |  |  | 275 |  |  |  | (470 | )
|  |  | (4,116 | ) |  |  | 2,163 |  |  |  | 17,207 |
Total income tax expense (benefit) |  | $ | (2,507 | ) |  | $ | 8,250 |  |  | $ | 26,893 |
The income before tax is comprised of the following:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Domestic operations |  | $ | (7,087 | ) |  | $ | 49,089 |  |  | $ | 57,079 |
Foreign operations |  | $ | 6,490 |  |  | $ | 4,257 |  |  | $ | 2,723 |
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. federal income tax rate of 21% for the years ended December 31, 2019 and 2018, and 35% for years ended December 31, 2017 to income before provision for income taxes as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Federal income tax provision at statutory rate |  | $ | (125 | ) |  | $ | 11,203 |  |  | $ | 20,931 |
State taxes, net of federal effect |  |  | 113 |  |  |  | 747 |  |  |  | 573 |
Foreign taxes, net of federal effect |  |  | (1,277 | ) |  |  | 17 |  |  |  | (238 | )
Domestic manufacturing benefit |  |  | — |  |  |  | — |  |  |  | (1,569 | )
Foreign Derived Intangible Income ("FDII") Deduction |  |  | (2,278 | ) |  |  | (2,217 | ) |  |  | — |
Global Intangible Low-Taxes Income ("GILTI") inclusion |  |  | 1,786 |  |  |  | 113 |  |  |  | — |
Non-deductible officer's compensation |  |  | 826 |  |  |  | 526 |  |  |  | — |
Research & development tax credit |  |  | (2,126 | ) |  |  | (2,298 | ) |  |  | (1,559 | )
Remeasurement of deferred tax balances, related to the Tax Act |  |  | — |  |  |  | (33 | ) |  |  | 8,020 |
Transition tax on foreign earnings, related to the Tax Act |  |  | — |  |  |  | 138 |  |  |  | (106 | )
Other |  |  | 574 |  |  |  | 54 |  |  |  | 841 |
Provision (benefit) for income taxes |  | $ | (2,507 | ) |  | $ | 8,250 |  |  | $ | 26,893 |
Effective tax rate |  |  | 420 | % |  |  | 15 | % |  |  | 45 | %
Deferred tax assets and liabilities are comprised of the following:
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Reserves and accruals |  | $ | 8,254 |  |  | $ | 4,880 |
Deferred revenue |  |  | 1,219 |  |  |  | 1,201 |
Share-based compensation |  |  | 2,955 |  |  |  | 1,259 |
Tax credit carryforward |  |  | 11,307 |  |  |  | 2,484 |
Net operating losses |  |  | 6,008 |  |  |  | 1,692 |
Depreciation and amortization |  |  | 7,151 |  |  |  | 4,298 |
Operating lease right-of-use assets (1) |  |  | 4,965 |  |  |  | — |
Other |  |  | 1,128 |  |  |  | 777 |
Gross deferred tax assets |  |  | 42,987 |  |  |  | 16,591 |
Less: valuation allowance |  |  | (14,160 | ) |  |  | (3,172 | )
Total deferred tax assets after valuation allowance |  |  | 28,827 |  |  |  | 13,419 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (89,286 | ) |  |  | (609 | )
Operating lease liabilities (1) |  |  | (4,709 | ) |  |  | — |
Other |  |  | (416 | ) |  |  | — |
Gross deferred tax liabilities |  |  | (94,411 | ) |  |  | (609 | )
Net deferred tax assets (liabilities) |  | $ | (65,584 | ) |  | $ | 12,810 |
(1) As discussed in Note 7 to the Consolidated Financial Statements, in 2019, the Company adopted an updated accounting standard that resulted in the recognition of operating right-of-use assets and lease liabilities. The Company adopted this standard using a transition method that does not require application to periods prior to adoption. At December 31, 2019 and 2018, the Company had recorded valuation allowances of $14,160 and $3,172, respectively, on a certain portion of the Company’s deferred tax assets to reflect the deferred tax assets at the net amount that is more likely than not to be realized. The Company maintained a full valuation allowance on its remaining foreign tax credits in the amount of $2,366, as well as maintaining a full valuation allowances against its China, Switzerland and United Kingdom deferred tax assets of $478, $3,434 and $443, respectively. The Company also maintained a valuation allowance against a portion of its California deferred tax assets of $7,439. In assessing the realizability of deferred tax assets, the Company uses a more likely than not standard. If it is determined that it is more-likely-than-not that deferred tax assets will not be realized, a valuation allowance must be established against the deferred tax assets. The ultimate realization of the assets is dependent on the generation of future taxable income during the periods in which the associated temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income and tax planning strategies when making this assessment. In making the determination that it is more likely than not that the Company’s deferred tax assets will be realized as of December 31, 2019, the Company relied primarily on the reversal of deferred tax liabilities as well as projected future taxable income. At December 31, 2019, the Company had federal, state and foreign net operating loss carryforwards of $1,997, $25,630 and $20,986, respectively. The federal, state and foreign net operating loss carryforwards expire on various dates beginning in 2020 through 2035. At December 31, 2019, the Company had federal and state research & development credits and foreign tax credit carryforwards of $6,859, $9,948 and $2,366, respectively. The state research & development credits are set to expire at various dates beginning in 2025. The foreign tax credit is set to expire at various dates through December 31, 2029. As of December 31, 2019, the Company has provided U.S. income taxes on all its foreign earnings. The Company continues to permanently reinvest the cash held offshore to support its working capital needs. Accordingly, no additional foreign withholding taxes that may be required from certain jurisdictions in the event of a cash distribution have been provided for. The total amount of unrecognized tax benefits are as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance, beginning of the period |  | $ | 5,528 |  |  | $ | 4,880 |  |  | $ | 4,827 |
Gross increases—tax positions in prior period |  |  | 9,989 |  |  |  | 496 |  |  |  | 171 |
Gross decreases—tax positions in prior period |  |  | (932 | ) |  |  | (61 | ) |  |  | (362 | )
Gross increases—current-period tax positions |  |  | 558 |  |  |  | 213 |  |  |  | 244 |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Balance, end of the period |  | $ | 15,143 |  |  | $ | 5,528 |  |  | $ | 4,880 |
The unrecognized tax benefit at December 31, 2019 and 2018 were $15,143 and $5,528, respectively, of which $10,649 and $4,995, respectively, would be reflected as an adjustment to income tax expense if recognized. The year over year increase from 2018 to 2019 is primarily due to additional unrecognized tax benefits related to federal tax exposures. It is reasonably possible that certain amounts of unrecognized tax benefits may reverse in the next 12 months; however, the Company does not expect such reversals to have a significant impact on its results of operations or financial position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2019, 2018 and 2017, the Company recognized approximately $236, $199 and $246, respectively, in interest and penalties expense associated with uncertain tax positions. As of December 31, 2019 and 2018, the Company had accrued interest and penalties expense related to unrecognized tax benefits of $1,681 and $1,445, respectively. The Company is subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. The Company is subject to ordinary statute of limitation rules of three and four years for federal and state returns, respectively. However, due to tax attribute carryforwards, the Company is subject to examination for tax years 2003 forward for U.S. federal tax purposes. The Company is also subject to examination in various states for tax years 2002 forward. The Company is subject to examination for tax years 2011 forward for various foreign jurisdictions. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from any future examinations of these years. In the normal course of business, the Company is subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes or other taxes against it. Although the Company believes its tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from the Company’ s historical income tax provisions and accruals. The results of an audit or litigation could have a material adverse effect on the Company’ s results of operations or cash flows in the period or periods for which that determination is made.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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