XML 29 R12.htm IDEA: XBRL DOCUMENT
v3.20.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2020
INCOME TAXES |
INCOME TAXES | NOTE 5. INCOME TAXES The geographic distribution of pretax income from continuing operations is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
Domestic | ​ | $ | 17,526 | ​ | $ | (20,597) | ​ | $ | 22,325
Foreign | ​ |  | 140,621 | ​ |  | 87,791 | ​ |  | 150,051
​ | ​ | $ | 158,147 | ​ | $ | 67,194 | ​ | $ | 172,376
​ The provision for income taxes from continuing operations is summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
Current: |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 5,475 | ​ | $ | (9,627) | ​ | $ | 1,423
State | ​ |  | 1,927 | ​ |  | 882 | ​ |  | 12
Foreign | ​ |  | 16,216 | ​ |  | 18,429 | ​ |  | 13,772
Total current provision | ​ | $ | 23,618 | ​ | $ | 9,684 | ​ | $ | 15,207
Deferred: | ​ |  |  | ​ |  |  | ​ |  |
Federal | ​ | $ | (312) | ​ | $ | 3,822 | ​ | $ | 4,021
State | ​ |  | 1,270 | ​ |  | (178) | ​ |  | 2,363
Foreign | ​ |  | (1,580) | ​ |  | (2,629) | ​ |  | 3,636
Total deferred provision (benefit) | ​ |  | (622) | ​ |  | 1,015 | ​ |  | 10,020
Total provision for income taxes | ​ | $ | 22,996 | ​ | $ | 10,699 | ​ | $ | 25,227
​ The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the three years ended December 31, 2020 primarily due to the benefit of earnings in foreign jurisdictions which are subject to lower tax rates, offset by net U.S. tax on foreign operations and withholding taxes. The principal causes of the difference between the federal statutory rate and the effective income tax rate for each of the years below are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
Income taxes per federal statutory rate | ​ | $ | 33,211 | ​ | $ | 14,111 | ​ | $ | 36,199
State income taxes, net of federal deduction | ​ | ​ | 2,793 | ​ | ​ | 10 | ​ | ​ | 2,372
U.S. tax on foreign operations | ​ | ​ | 9,666 | ​ | ​ | 5,805 | ​ | ​ | 6,943
Foreign derived intangible income deduction | ​ | ​ | (4,070) | ​ | ​ | – | ​ | ​ | (261)
Tax effect of foreign operations | ​ | ​ | (20,527) | ​ | ​ | (13,086) | ​ | ​ | (19,162)
Uncertain tax position | ​ | ​ | (3,215) | ​ | ​ | (4,487) | ​ | ​ | (3,088)
Unremitted earnings | ​ | ​ | (567) | ​ | ​ | 1,624 | ​ | ​ | 2,564
Tax credits | ​ | ​ | (2,292) | ​ | ​ | (2,088) | ​ | ​ | (1,484)
Change in valuation allowance | ​ | ​ | (1,175) | ​ | ​ | 7,222 | ​ | ​ | (1,306)
Withholding taxes | ​ | ​ | 4,265 | ​ | ​ | 6,500 | ​ | ​ | 1,371
Other permanent items, net | ​ | ​ | 4,907 | ​ | ​ | (4,912) | ​ | ​ | 1,079
Total provision for income taxes | ​ | $ | 22,996 | ​ | $ | 10,699 | ​ | $ | 25,227
​ Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2020 |  | 2019
Deferred tax assets |  | ​ |  |  | ​ |
Stock-based compensation | ​ | $ | 2,130 | ​ | $ | 1,757
Net operating loss and tax credit carryforwards | ​ |  | 57,590 | ​ |  | 86,879
Interest expense limitation | ​ | ​ | 7,344 | ​ | ​ | 7,620
Pension obligation | ​ |  | 14,297 | ​ |  | 13,473
Excess and obsolete inventory | ​ |  | 3,722 | ​ |  | 3,217
Accrued restructuring | ​ | ​ | 2,468 | ​ | ​ | —
Deferred revenue | ​ |  | 3,048 | ​ |  | 3,305
Employee bonuses and commissions | ​ |  | 5,388 | ​ |  | 2,537
Depreciation and amortization | ​ |  | 28,786 | ​ |  | 29,015
Operating lease liabilities | ​ | ​ | 20,267 | ​ | ​ | 23,451
Other | ​ |  | 8,925 | ​ |  | 9,685
Deferred tax assets | ​ |  | 153,965 | ​ |  | 180,939
Less: Valuation allowance | ​ |  | (46,702) | ​ |  | (76,206)
Net deferred tax assets | ​ |  | 107,263 | ​ |  | 104,733
Deferred tax liabilities | ​ |  |  | ​ |  |
Depreciation and amortization | ​ |  | 40,266 | ​ |  | 41,549
Unremitted earnings | ​ |  | 4,173 | ​ |  | 4,740
Operating lease right-of-use assets | ​ | ​ | 18,731 | ​ | ​ | 22,774
Other | ​ |  | 3,380 | ​ |  | 2,966
Deferred tax liabilities | ​ |  | 66,550 | ​ |  | 72,029
Net deferred tax assets | ​ | $ | 40,713 | ​ | $ | 32,704
​ Of the $40.7 million and $32.7 million net deferred tax asset on December 31, 2020 and 2019, respectively, $50.8 million and $42.7 million is reflected as a net non-current deferred tax asset and $10.1 million and $10.0 million is reflected as a long-term liability on December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company has recorded a valuation allowance on $4.2 million of its U.S. domestic deferred tax assets, largely attributable to state carryforward attributes that are expected to expire before sufficient income can be realized in those jurisdictions. The remaining valuation allowance on deferred tax assets approximates $42.5 million and is associated primarily with operations in Germany, Hong Kong, and Switzerland. As of December 31, 2020, there is not sufficient positive evidence to conclude that such deferred tax assets, presently reduced by a valuation allowance, will be recognized. The December 31, 2020 valuation allowance balance reflects a decrease of $29.5 million during the year. The change in the valuation allowance is primarily due to the dissolution of an Austrian entity, refinements in the determination of Artesyn attributes acquired in 2019, and the netting of Section 382 limited attributes that will never be available for utilization with their valuation allowance, partially offset by increases due to foreign exchange movements. As of December 31, 2020, the Company had U.S., foreign and state tax loss carryforwards of $70.3 million, $129.6 million, and $117.7 million, respectively. Additionally, the Company had $0.2 million and $30.5 million of capital loss and interest expense limitation carryforwards, respectively. Finally, the Company had U.S. and state tax credit carryforwards of $1.3 million and $1.7 million, respectively. The U.S. and state net operating losses, tax credits, and interest expense limitation are subject to various utilization limitations under Section 382 of the Internal Revenue Code and applicable state laws. These Section 382 limited attributes have various expiration periods through 2036 or, in the case of the interest expense limitation amount, no expiration period. Much of the foreign jurisdiction, and $8.0 million of the federal net operating loss carry forwards, have no expiration period. We operate under a tax holiday in Singapore and China. These tax holidays are in effect through June 30, 2027 and December 31, 2022, respectively. The tax holiday is conditional upon our meeting certain employment and investment thresholds. The impact of the tax holidays decreased foreign taxes by $13.0 million and $4.0 million for 2020 and 2019, respectively. The benefit of the tax holiday on earnings per diluted share was $0.34 and $0.12 for 2020 and 2019, respectively. As of December 31, 2020, we have undistributed earnings of certain foreign subsidiaries of approximately $58.9 million that we have indefinitely invested, and on which we have not recognized deferred taxes. Estimating the amount of potential tax is not practicable because of the complexity and variety of assumptions necessary to compute the tax. We account for uncertain tax positions by applying a minimum recognition threshold to tax positions before recognizing these positions in the financial statements. The reconciliation of our total gross unrecognized tax benefits is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
Balance at beginning of period | ​ | $ | 13,009 | ​ | $ | 13,162 | ​ | $ | 15,990
Additions based on tax positions taken during a prior period | ​ |  | 219 | ​ |  | 484 | ​ |  | 94
Additions based on tax positions taken during a prior period – acquisitions | ​ |  | — | ​ |  | 4,479 | ​ |  | 757
Additions based on tax positions taken during the current period | ​ |  | — | ​ |  | — | ​ |  | —
Reductions based on tax positions taken during a prior period | ​ |  | — | ​ |  | (4,295) | ​ |  | (153)
Reductions related to a lapse of applicable statute of limitations | ​ |  | (3,555) | ​ |  | (821) | ​ |  | (3,144)
Reductions related to a settlement with taxing authorities | ​ |  | — | ​ |  | — | ​ |  | (382)
Balance at end of period | ​ | $ | 9,673 | ​ | $ | 13,009 | ​ | $ | 13,162
​ The unrecognized tax benefits of $9.7 million, if recognized, will impact the Company’s effective tax rate. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. We had $3.2 million and $3.0 million of accrued interest and penalties on December 31, 2020 and 2019, respectively. We expect the total amount of tax contingencies will decrease by approximately $3.5 million in 2021 based on statute of limitation expiration. With few exceptions, the Company is no longer subject to federal, state, or foreign income tax examinations by tax authorities for years before 2017.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration