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Income Taxes: | 12 Months Ended
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Dec. 31, 2021
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,
|  | 2021 |  | 2020 |  | 2019
United States |  | $ | 81,484 |  |  | $ | 41,194 |  |  | $ | 32,849 |
Foreign |  | 41,702 |  |  | 56,300 |  |  | 81,858 |
|  | $ | 123,186 |  |  | $ | 97,494 |  |  | $ | 114,707 |
The provision (benefit) for income taxes consisted of the following (in thousands):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |
Federal |  | $ | 20,646 |  |  | $ | 6,032 |  |  | $ | 6,851 |
State |  | 3,444 |  |  | 2,422 |  |  | 2,532 |
Foreign |  | 7,236 |  |  | 7,290 |  |  | 7,994 |
|  | $ | 31,326 |  |  | $ | 15,744 |  |  | $ | 17,377 |
Deferred: |  |  |  |  |  |
Federal |  | $ | (8,154) |  |  | $ | (5,319) |  |  | $ | (6,720) |
State |  | (1,815) |  |  | (1,850) |  |  | (325) |
Foreign |  | (1,306) |  |  | 2,049 |  |  | 3,340 |
|  | (11,275) |  |  | (5,120) |  |  | (3,705) |
|  | $ | 20,051 |  |  | $ | 10,624 |  |  | $ | 13,672 |
We have accrued for tax contingencies for potential tax assessments, and in 2021 we recognized a $3.0 million net increase, most of which related to various federal, state and foreign tax reserves. 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,
|  | 2021 |  | 2020 |  | 2019
|  | Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Federal tax at the expected statutory rate |  | $ | 25,869 |  |  | 21.0 | % |  | $ | 20,474 |  |  | 21.0 | % |  | $ | 24,088 |  |  | 21.0 | %
State income tax, net of federal effect |  | 2,907 |  |  | 2.4 | % |  | 2,099 |  |  | 2.2 | % |  | 1,269 |  |  | 1.1 | %
Tax credits |  | (2,443) |  |  | (2.0) | % |  | (3,269) |  |  | (3.4) | % |  | (2,896) |  |  | (2.5) | %
Global intangible low-taxed income |  | 711 |  |  | 0.6 | % |  | 163 |  |  | 0.2 | % |  | 6,634 |  |  | 5.8 | %
Foreign income tax differential |  | (2,983) |  |  | (2.4) | % |  | (3,888) |  |  | (4.0) | % |  | (5,939) |  |  | (5.2) | %
Stock-based compensation |  | (4,263) |  |  | (3.5) | % |  | (4,686) |  |  | (4.8) | % |  | (8,446) |  |  | (7.4) | %
Foreign-derived intangible income |  | (3,775) |  |  | (3.1) | % |  | (2,718) |  |  | (2.8) | % |  | (516) |  |  | (0.5) | %
IP installment sale and repatriation |  | — |  |  | — | % |  | — |  |  | — | % |  | (2,118) |  |  | (1.8) | %
Contingent consideration |  | (29) |  |  | — | % |  | 1,566 |  |  | 1.6 | % |  | — |  |  | — | %
Section 162(m) |  | 1,812 |  |  | 1.5 | % |  | 1,079 |  |  | 1.1 | % |  | 203 |  |  | 0.2 | %
Other |  | 2,245 |  |  | 1.8 | % |  | (196) |  |  | (0.2) | % |  | 1,393 |  |  | 1.2 | %
|  | $ | 20,051 |  |  | 16.3 | % |  | $ | 10,624 |  |  | 10.9 | % |  | $ | 13,672 |  |  | 11.9 | %
Tax credits in 2021, 2020 and 2019 consist principally of research and developmental tax credits. 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 installment sale and repatriation. The components of our deferred income tax assets (liabilities) are as follows (in thousands):
|  | As of December 31,
|  | 2021 |  | 2020
Deferred tax asset: |  |  |  |
Accruals/other |  | $ | 6,866 |  |  | $ | 4,406 |
Acquired future tax deductions |  | 5,440 |  |  | 7,781 |
Stock-based compensation |  | 7,283 |  |  | 7,138 |
Foreign currency translation adjustments |  | 3,360 |  |  | 2,406 |
Tax credits |  | 11,953 |  |  | 12,444 |
Inventory reserves |  | 8,199 |  |  | 8,493 |
Allowance for doubtful accounts |  | 926 |  |  | 4,460 |
Accrued restructuring |  | 131 |  |  | 1,293 |
Chargebacks, discounts, customer concessions |  | 27,970 |  |  | 22,874 |
Valuation allowance |  | (2,934) |  |  | (3,891) |
|  | $ | 69,194 |  |  | $ | 67,404 |
Deferred tax liability: |  |  |  |
State income taxes |  | $ | 2,724 |  |  | $ | 2,398 |
Foreign |  | — |  |  | 776 |
Depreciation and amortization |  | 20,483 |  |  | 25,113 |
Section 481(a) adjustment - change in accounting method |  | 4,873 |  |  | 9,746 |
|  | $ | 28,080 |  |  | $ | 38,033 |
Deferred tax asset, net |  | $ | 41,114 |  |  | $ | 29,371 |
Tax Holidays and Carryforwards Net operating loss ("NOL") carryforwards consist of: (a) federal NOL carryforwards of $2.5 million which will expire at various dates from 2023 to indefinite carryforward periods, (b) state NOL carryforwards of $8.2 million which will expire at various dates from 2022 to indefinite carryforward periods and (c) foreign NOL carryforwards of $15.0 million which will expire at various dates from 2022 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 $16.9 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 $9.8 million or $0.45 per diluted share in 2021 and by $8.0 million or $0.37 per diluted share in 2020. 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, 2021, we have estimated $98.6 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 U.S. and various states and foreign jurisdictions. Our U.S. federal income tax returns for tax years 2018 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, 2021 was $21.5 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, 2021, 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, 2021 or 2020. The following table summarizes our cumulative gross unrecognized tax benefits (in thousands):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Beginning balance |  | $ | 18,443 |  |  | $ | 15,027 |  |  | $ | 10,824 |
Increases to prior year tax positions |  | 231 |  |  | 502 |  |  | 138 |
Increases to current year tax positions |  | 3,242 |  |  | 2,987 |  |  | 4,231 |
Decreases to prior year tax positions |  | — |  |  | (15) |  |  | (3) |
Decrease related to lapse of statute of limitations |  | (31) |  |  | (58) |  |  | (163) |
Decrease related to settlements with tax authorities |  | (348) |  |  | — |  |  | — |
Ending balance |  | $ | 21,537 |  |  | $ | 18,443 |  |  | $ | 15,027 |

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