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Income Taxes: | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | INCOME TAXES Income from continuing operations before taxes consisted of the following (in thousands):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
United States |  | $ | 32,849 |  |  | $ | (8,600 | ) |  | $ | 59,872 |
Foreign |  | 81,858 |  |  | 30,974 |  |  | (8,589 | )
|  | $ | 114,707 |  |  | $ | 22,374 |  |  | $ | 51,283 |
The (benefit) provision for income taxes consisted of the following (in thousands):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 6,851 |  |  | $ | 492 |  |  | $ | 2,774 |
State |  | 2,532 |  |  | 1,865 |  |  | 2,263 |
Foreign |  | 7,994 |  |  | 9,136 |  |  | 3,170 |
|  | 17,377 |  |  | 11,493 |  |  | 8,207 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  | $ | (6,720 | ) |  | $ | (9,118 | ) |  | $ | (20,878 | )
State |  | (325 | ) |  | (3,072 | ) |  | (4,619 | )
Foreign |  | 3,340 |  |  | (5,722 | ) |  | (71 | )
|  | (3,705 | ) |  | (17,912 | ) |  | (25,568 | )
|  | $ | 13,672 |  |  | $ | (6,419 | ) |  | $ | (17,361 | )
We have accrued for tax contingencies for potential tax assessments, and in 2019 we recognized a $4.2 million net increase, most of which related to various federal, state and foreign tax reserves. On December 22, 2017, the Tax Act was enacted into legislation, which includes a broad range of provisions affecting businesses. The Tax Act significantly revises how companies compute their U.S. corporate tax liability by, among other provisions, reducing the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, implementing a territorial tax system, and requiring a mandatory one-time tax on U.S. owned undistributed foreign earnings and profits known as the toll charge or transition tax. Pursuant to the SEC Staff Accounting Bulletin ("SAB") No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" ("SAB 118"), a company selects between one of three scenarios to reflect the impact of the Tax Act in its financial statements within a measurement period. Those scenarios are (i) a final estimate which effectively closes the measurement period; (ii) a reasonable estimate leaving the measurement period open for future revisions; and (iii) no estimate as the law is still being analyzed in which case a company continues to apply its accounting on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. SAB 118 allows for the reporting provisional amounts for certain income tax effects in scenario (ii) and (iii). The measurement period begins in the reporting period that includes the Act’s enactment date and ends when an entity has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements under ASC Topic 740. As of December 31, 2018, our accounting for the Tax Act was complete. The toll charge on undistributed foreign earnings and profits (the “Transition Tax”) is a tax on certain untaxed accumulated and current earnings and profits ("E&P") of our foreign subsidiaries. We were able to reasonably estimate the Transition Tax and recorded a provisional Transition Tax expense of $2.0 million for the year ended December 31, 2017. On the basis of revised E&P computations that were completed during the reporting period, we recognized an additional measurement-period adjustment of $0.6 million to the Transition Tax obligation, with a corresponding adjustment of $0.6 million to income tax expense. The revaluation of deferred taxes is an adjustment to future tax obligations as a result of the reduction of the corporate tax rate from 35% to 21%. We were able to reasonably estimate the effect of the revaluation of deferred taxes and recorded a provisional tax expense of $1.1 million for the year ended December 31, 2017. The computation of timing differences was completed during the reporting period. We recognized an additional measurement-period adjustment of $0.2 million, with a corresponding adjustment of $0.2 million to income tax expense. A reconciliation of the provision for income taxes at the statutory rate to our effective tax rate is as follows (dollars in thousands):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
|  | Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Federal tax at the expected statutory rate |  | $ | 24,088 |  |  | 21.0 | % |  | $ | 4,699 |  |  | 21.0 | % |  | $ | 17,950 |  |  | 35.0 | %
State income tax, net of federal effect |  | 1,269 |  |  | 1.1 | % |  | 927 |  |  | 4.1 | % |  | (403 | ) |  | (0.8 | )%
Tax credits |  | (2,896 | ) |  | (2.5 | )% |  | (4,961 | ) |  | (22.2 | )% |  | (2,783 | ) |  | (5.4 | )%
Global intangible low-taxed income |  | 6,118 |  |  | 5.3 | % |  | 2,363 |  |  | 10.6 | % |  | — |  |  | — | %
Foreign income tax differential |  | (5,939 | ) |  | (5.2 | )% |  | (2,944 | ) |  | (13.2 | )% |  | 3,481 |  |  | 6.8 | %
Stock based compensation |  | (8,446 | ) |  | (7.4 | )% |  | (11,040 | ) |  | (49.3 | )% |  | (18,958 | ) |  | (37.0 | )%
Impact of the Tax Act |  | — |  |  | — | % |  | 826 |  |  | 3.7 | % |  | 3,076 |  |  | 6.0 | %
IP installment sale and repatriation |  | (2,118 | ) |  | (1.8 | )% |  | 3,252 |  |  | 14.5 | % |  | 3,367 |  |  | 6.6 | %
Bargain purchase gain |  | — |  |  | — | % |  | — |  |  | — | % |  | (24,811 | ) |  | (48.4 | )%
Section 162(m) |  | 203 |  |  | 0.2 | % |  | 456 |  |  | 2.0 | % |  | 595 |  |  | 1.2 | %
Other |  | 1,393 |  |  | 1.2 | % |  | 3 |  |  | 0.1 | % |  | 1,125 |  |  | 2.2 | %
|  | $ | 13,672 |  |  | 11.9 | % |  | $ | (6,419 | ) |  | (28.7 | )% |  | $ | (17,361 | ) |  | (33.8 | )%
Tax credits in 2019, 2018 and 2017 consist principally of research and developmental tax credits. The tax effect of the gain on bargain purchase is treated as a part of purchase accounting and is not a component of the income tax provision. Certain intellectual property and assets were repatriated in 2019 from a liquidation of foreign subsidiaries to the U.S. parent. The tax effect of the repatriation is included as IP repatriation. The components of our deferred income tax assets (liabilities) are as follows (in thousands):
|  | December 31,
|  | 2019 |  | 2018
Deferred tax asset: |  |  |  |  |  |
Accruals/other |  | 2,632 |  |  | 11,109 |
Contingent consideration |  | — |  |  | 12,451 |
Net operating loss carryforwards |  | — |  |  | 12,686 |
Acquired future tax deductions |  | 8,711 |  |  | 10,722 |
Stock-based compensation |  | 9,654 |  |  | 10,775 |
Foreign currency translation adjustments |  | 2,716 |  |  | 3,108 |
Tax credits |  | 11,331 |  |  | 14,470 |
Inventory reserves |  | 4,305 |  |  | 5,674 |
Allowance for doubtful accounts |  | 4,242 |  |  | 830 |
Accrued restructuring |  | 7,072 |  |  | 182 |
Chargebacks, discounts, customer concessions |  | 20,975 |  |  | — |
Valuation allowance |  | (3,677 | ) |  | (5,436 | )
|  | $ | 67,961 |  |  | $ | 76,571 |
Deferred tax liability: |  |  |  |  |  |
State income taxes |  | $ | 2,600 |  |  | $ | 2,639 |
Foreign |  | 997 |  |  | 612 |
Depreciation and amortization |  | 23,839 |  |  | 35,387 |
Section 481(a) adjustment - change in accounting method |  | 14,618 |  |  | — |
|  | $ | 42,054 |  |  | $ | 38,638 |
Deferred tax asset, net |  | $ | 25,907 |  |  | $ | 37,933 |
Tax Holidays and Carryforwards Net operating loss ("NOL") carryforwards consist of: (a) federal NOL carryforwards of $14.8 million which will expire at various dates from 2020 to indefinite carryforward periods, (b) state NOL carryforwards of $1.4 million which will expire at various dates from 2029 to indefinite carryforward periods and (c) foreign NOL carryforwards of $18.4 million which will expire at various dates from 2020 to indefinite carryforward periods. Under Section 382 of the Internal Revenue Code, certain ownership changes limit the utilization of the NOL carryforwards, and the amount of federal NOL carryforwards recorded is the net federal benefit available. Other carryforwards include state research and development (“R&D”) tax credit carryforwards of $14.7 million, which have an indefinite carryforward period. A substantial portion of our manufacturing operations in Costa Rica operate under various tax holiday and tax incentive programs due to expire in whole or in part in 2027. Certain of the holidays may be extended if specific conditions are met. The net impact of these tax holiday and tax incentives was an increase to our net earnings by $7.8 million or $0.36 per diluted share in 2019 and by $8.8 million or $0.41 per diluted share in 2018. Foreign currency translation adjustments, and related tax effects, are an element of “other comprehensive income” and are not included in net income other than the revaluation of the associated deferred tax asset due to the Tax Act. As of December 31, 2019, we have estimated $78.5 million of undistributed foreign earnings and profits. Such earnings were previously subject to U.S. tax as a result of the Tax Act and much of any future remittances would generally be subject to no U.S. tax as a result of dividends received deductions and/or foreign tax credit relief. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we incur significant additional costs upon repatriation of such amounts. We are subject to taxation in the United States and various states and foreign jurisdictions. Our United States federal income tax returns for tax years 2016 and forward are subject to examination by the Internal Revenue Service. Our principal state income tax returns for tax years 2012 and forward are subject to examination by the state tax authorities. The total gross amount of unrecognized tax benefits as of December 31, 2019 was $15.0 million which, if recognized, would impact the effective tax rate. We believe that adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. As of December 31, 2019, it is not possible to estimate the amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We have not accrued any penalties or interest as of December 31, 2019 or December 31, 2018. The following table summarizes our cumulative gross unrecognized tax benefits (in thousands):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Beginning balance |  | $ | 10,824 |  |  | $ | 6,527 |  |  | $ | 2,000 |
Increases to prior year tax positions |  | 138 |  |  | — |  |  | 77 |
Increases due to acquisitions |  | — |  |  | — |  |  | 640 |
Increases to current year tax positions |  | 4,231 |  |  | 4,536 |  |  | 3,992 |
Decreases to prior year tax positions |  | (3 | ) |  | (146 | ) |  | (12 | )
Decrease related to lapse of statute of limitations |  | (163 | ) |  | (93 | ) |  | (170 | )
Ending balance |  | $ | 15,027 |  |  | $ | 10,824 |  |  | $ | 6,527 |

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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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