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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES On December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (“TCJA”) was signed into law. Significant provisions that have impacted (and will in the future impact) our effective tax rate include the reduction in the corporate tax rate from 35% to 21%, effective in 2018; a one-time deemed repatriation (“transition tax”) on earnings of certain foreign subsidiaries that were previously tax deferred; and new taxes on certain foreign sourced earnings. At December 31, 2017, we had not completed our accounting for the tax effects of the TCJA; however, in certain cases, as described below, we have made reasonable estimates of the effects on our existing deferred tax balances and impact of the one-time transition tax. In accordance with SEC Staff Accounting Bulletin 118 (“SAB 118”), income tax effects of the TCJA may be refined upon obtaining, preparing, and/or analyzing additional information during the measurement period and such changes could be material. During the measurement period, provisional amounts may also be adjusted for the effects, if any, of interpretative guidance issued after December 31, 2017, by U.S. regulatory and standard-setting bodies. For the items for which we were able to determine a reasonable estimate, we recognized the following provisional impacts.
• | The reduction in the U.S. corporate tax rate resulted in a net tax benefit of approximately $8.4 million related to the revaluation of our U.S. net deferred tax liability. We are still analyzing certain aspects of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts.
• | The transition tax resulted in a one-time tax expense of approximately $10.6 million. We have not yet completed our calculation of the total post-1986 foreign earnings and profits (“E&P”) for our foreign subsidiaries as E&P will not be finalized until the federal income tax return is filed.
The tax expense recognized represents our best estimate of the impact of the TCJA. During 2018, we will continue to refine the calculations related to both provisional amounts as we gain a more thorough understanding of the tax law and certain aspects of the TCJA are clarified by U.S. tax, regulatory, and standard-setting authorities. For tax years beginning after December 31, 2017, the TCJA introduces new provisions of U.S. taxation of certain Global Intangible Low-Tax Income (“GILTI”). Due to its complexity and a current lack of guidance as to how to calculate the tax, we are not yet able to determine a reasonable estimate for the impact of the incremental tax liability. The FASB provided guidance that companies should make an accounting policy election to either treat taxes on GILTI as period costs or use the deferred method. When additional analysis is complete and further guidance is available, we will make a policy election for how GILTI will be recorded. Our non-U.S. earnings are currently considered as indefinitely reinvested overseas. Previously, any repatriation by way of a dividend may have been subject to both U.S. federal and state income taxes, as adjusted for any non-U.S. tax credits. Such dividends should not be subject to U.S. federal tax under the TCJA. We are still analyzing how the TCJA impacts our existing accounting position to indefinitely reinvest foreign earnings, and we have yet to determine whether we plan to change our position. We will record the tax effects of any change to our existing assertion in the period that we complete our analysis and make such a change. If such earnings were to be distributed, any foreign withholding taxes could be material. For the years ended December 31, 2017, 2016 and 2015, income before income taxes is broken out between U.S. and foreign-sourced operations and consisted of the following (in thousands):
| 2017 |  | 2016 |  | 2015
Domestic | $ | 14,531 |  |  | $ | 6,174 |  |  | $ | 9,470 |
Foreign | 21,350 |  |  | 19,212 |  |  | 21,730 |
Total | $ | 35,881 |  |  | $ | 25,386 |  |  | $ | 31,200 |
The components of the provision for income taxes for the years ended December 31, 2017, 2016 and 2015, consisted of the following (in thousands):
| 2017 |  | 2016 |  | 2015
Current expense (benefit): |  |  |  |  |  |  |  |
Federal | $ | 3,849 |  |  | $ | 1,933 |  |  | $ | (17 | )
State | 645 |  |  | 492 |  |  | 747 |
Foreign | 5,168 |  |  | 3,802 |  |  | 3,218 |
Total current expense | 9,662 |  |  | 6,227 |  |  | 3,948 |
Deferred expense (benefit): |  |  |  |  |  |  |  |
Federal | (314 | ) |  | (144 | ) |  | 3,250 |
State | (216 | ) |  | (195 | ) |  | 294 |
Foreign | (774 | ) |  | (623 | ) |  | (94 | )
Total deferred (benefit) expense | (1,304 | ) |  | (962 | ) |  | 3,450 |
Total income tax expense | $ | 8,358 |  |  | $ | 5,265 |  |  | $ | 7,398 |
The difference between the income tax expense reported and amounts computed by applying the statutory federal rate of 35.0% to pretax income for the years ended December 31, 2017, 2016 and 2015, consisted of the following (in thousands):
| 2017 |  | 2016 |  | 2015
Computed federal income tax expense at statutory rate of 35% | $ | 12,559 |  |  | $ | 8,885 |  |  | $ | 10,920 |
State income taxes | 279 |  |  | 193 |  |  | 698 |
Tax credits | (1,377 | ) |  | (1,164 | ) |  | (1,019 | )
Production activity deduction | — |  |  | (53 | ) |  | — |
Foreign tax rate differential | (3,329 | ) |  | (3,717 | ) |  | (3,564 | )
Uncertain tax positions | (19 | ) |  | 597 |  |  | 536 |
Deferred compensation insurance assets | (479 | ) |  | (307 | ) |  | 182 |
Transaction-related expenses | 90 |  |  | 274 |  |  | — |
U.S. transition tax | 10,612 |  |  | — |  |  | — |
TCJA remeasurement of deferred taxes | (8,383 | ) |  | — |  |  | — |
Share-based payments | (2,264 | ) |  | — |  |  | — |
Bargain purchase gain | (1,570 | ) |  | — |  |  | — |
In-process research and development | 1,486 |  |  | — |  |  | — |
Other — including the effect of graduated rates | 753 |  |  | 557 |  |  | (355 | )
Total income tax expense | $ | 8,358 |  |  | $ | 5,265 |  |  | $ | 7,398 |
Deferred income tax assets and liabilities at December 31, 2017 and 2016, consisted of the following temporary differences and carry-forward items (in thousands):
| 2017 |  | 2016
Deferred income tax assets: |  |  |  |
Allowance for uncollectible accounts receivable | $ | 467 |  |  | $ | 645 |
Accrued compensation expense | 5,154 |  |  | 6,203 |
Inventory differences | 2,505 |  |  | 1,065 |
Net operating loss carryforwards | 15,741 |  |  | 27,742 |
Deferred revenue | 58 |  |  | 73 |
Stock-based compensation expense | 2,281 |  |  | 2,738 |
Federal research and development credit carryforward | — |  |  | 3,524 |
Foreign tax credits | — |  |  | 364 |
Other | 8,986 |  |  | 6,984 |
Total deferred income tax assets | 35,192 |  |  | 49,338 |
Deferred income tax liabilities: |  |  |  |  |
Prepaid expenses | (930 | ) |  | (782 | )
Property and equipment | (20,352 | ) |  | (25,108 | )
Intangible assets | (28,588 | ) |  | (35,773 | )
Other | (1,830 | ) |  | (1,480 | )
Total deferred income tax liabilities | (51,700 | ) |  | (63,143 | )
Valuation allowance | (4,422 | ) |  | (3,786 | )
Net deferred income tax assets (liabilities) | $ | (20,930 | ) |  | $ | (17,591 | )
Reported as: |  |  |
Deferred income tax assets - Current | $ | — |  |  | $ | 8,219 |
Deferred income tax assets - Long-term | 2,359 |  |  | 171 |
Deferred income tax liabilities - Long-term | (23,289 | ) |  | (25,981 | )
Net deferred income tax liabilities | $ | (20,930 | ) |  | $ | (17,591 | )
The long-term deferred income tax balances are not netted as they represent deferred amounts applicable to different taxing jurisdictions. Deferred income tax balances reflect the temporary differences between the carrying amounts of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The valuation allowance is primarily related to state credit carryforwards, non-US net operating loss carryforwards, and capital loss carryforwards for which we believe it is more likely than not that the deferred tax assets will not be realized. The valuation allowance increased by approximately $636,000, $1.8 million, and $378,000 during the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, we had U.S federal net operating loss carryforwards of approximately $67.9 million and $76.4 million, respectively, which were generated by Vascular Access Technologies, Inc., DFINE, Inc., and Biosphere Medical, Inc. prior to our acquisition of these companies. Vascular Access Technologies, Inc. was acquired on May 1, 2017. These net operating loss carryforwards, which expire at various dates through 2035, are subject to an annual limitation under Internal Revenue Code Section 382. We anticipate that we will utilize the net operating loss carryforwards over the next 18 years. We utilized a total of approximately $9.1 million and $6.2 million in U.S. federal net operating loss carryforwards during the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, we had approximately $5.4 million of non-U.S. net operating loss carryforwards, of which approximately $4.9 million have no expiration date and approximately $526,000 expire at various dates through 2027. As of December 31, 2016, we had $3.0 million of non-U.S. net operating loss carryforwards, which have no expiration date. Non-U.S. net operating loss carryforwards utilized during the years ended December 31, 2017 and 2016 were not material. We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. In our opinion, we have made adequate provisions for income taxes for all years subject to audit. We are no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2014. In foreign jurisdictions, we are no longer subject to income tax examinations for years before 2011. Although we believe our estimates are reasonable, the final outcomes of these matters may be different from those which we have reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and operating results in the period in which we make such determination. The total liability for unrecognized tax benefits at December 31, 2017, including interest and penalties, was approximately $3.1 million, of which approximately $2.7 million would favorably impact our effective tax rate if recognized. The total liability for uncertain tax benefits, as presented on our consolidated balance sheets, has been reduced by approximately $307,000 related to certain liabilities for unrecognized tax benefits, which, if realized, would reduce the transition tax under the TCJA by approximately $307,000. The total liability for unrecognized tax benefits at December 31, 2016, including interest and penalties, was approximately $2.8 million, of which approximately $2.8 million would favorably impact our effective tax rate if recognized. Approximately $2.3 million of the total liability at December 31, 2016 was presented as a reduction to non-current deferred income tax assets on our consolidated balance sheet. As of December 31, 2017 and 2016, we had accrued approximately $304,000 and $216,000 respectively, in total interest and penalties related to unrecognized tax benefits. We account for interest and penalties for unrecognized tax benefits as part of our income tax provision. During the years ended December 31, 2017, 2016 and 2015 we added interest and penalties of approximately $88,000, $30,000 and $6,000, respectively, to our liability for unrecognized tax benefits. It is reasonably possible that within the next 12 months the total liability for unrecognized tax benefits may change, net of potential decreases due to the expiration of statutes of limitation, up to $500,000. A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits for the years ended December 31, 2017, 2016 and 2015, consisted of the following (in thousands):
Tabular Roll-forward |  | 2017 |  | 2016 |  | 2015
Unrecognized tax benefits, opening balance |  | $ | 2,549 |  |  | $ | 1,982 |  |  | $ | 1,736 |
Gross increases in tax positions taken in a prior year |  | 80 |  |  | 77 |  |  | 187 |
Gross increases in tax positions taken in the current year |  | 403 |  |  | 856 |  |  | 763 |
Lapse of applicable statute of limitations |  | (283 | ) |  | (366 | ) |  | (704 | )
Unrecognized tax benefits, ending balance |  | $ | 2,749 |  |  | $ | 2,549 |  |  | $ | 1,982 |
The tabular roll-forward ending balance does not include interest and penalties related to unrecognized tax benefits.

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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://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
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