XML 37 R21.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Tax Reform On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act ("TCJA") that instituted fundamental changes to the U.S. Internal Revenue Code of 1986, as amended ("the Code"). We reflected an overall income tax liability of $10.2 million for the year ended December 31, 2017 with respect to TCJA as a result of remeasuring our U.S. deferred tax assets and liabilities using the 21% rate and recognizing a one-time transition tax charge on the deemed repatriation of previously undistributed accumulated earnings and profits of our international subsidiaries. Due to the significant and complex changes to the Code from the TCJA, the SEC issued Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act," (SAB 118). SAB 118 provides measurement period for up to one year for adjustments to be made to account for the effects of the TCJA. The Company reflected the income tax effects of those aspects of TCJA for which the accounting was complete. To the extent the Company’s accounting for certain income tax effects of TCJA was incomplete but the Company was able to determine a reasonable estimate, the Company recorded a provisional estimate in the financial statements. For those items where a reasonable estimate could not be made, a provisional amount was not recorded and the Company continued to apply the provisions of the tax laws that were in effect immediately before the enactment of TCJA. During 2018, we revised our initial provisional amount recorded for the transitional tax on the deemed repatriation of the accumulated earnings and profits of our international subsidiaries and the impact of the federal tax rate change on the value of our deferred tax assets and liabilities. The transition tax liability on the deemed repatriation decreased $4.2 million, primarily as a result of additional analysis performed over our historical foreign earnings and foreign source income which provided increased ability to credit foreign taxes associated with the deemed repatriation. In addition, adjustments to deferred assets and liabilities recorded upon the filing of our 2017 federal income tax return resulted in a $1.2 million expense from the rate change. Income Statement Components The jurisdictional components of income before taxes consist of the following:
|  | December 31, |  |  |  |
(in thousands) |  | 2018 |  | 2017 |  | 2016
Income before income taxes: |  |  |  |  |  |
Domestic |  | $ | 66,858 |  | $ | 61,329 |  | $ | 44,446
Foreign |  | 27,673 |  | 21,038 |  | 17,743
|  | $ | 94,531 |  | $ | 82,367 |  | $ | 62,189
The components of income tax expense (benefit) consist of the following:
|  | December 31, |  |  |  |
(in thousands) |  | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |  |
Domestic |  | $ | 6,771 |  | $ | 26,713 |  | $ | 11,958
Foreign |  | 7,391 |  | 6,222 |  | 5,491
State |  | 4,831 |  | 3,789 |  | 2,075
|  | 18,993 |  | 36,724 |  | 19,524
Deferred: |  |  |  |  |  |
Domestic |  | 2,542 |  | 1,711 |  | 1,580
Foreign |  | (390) |  | (155) |  | 934
State |  | (100) |  | (228) |  | 106
|  | 2,052 |  | 1,328 |  | 2,620
Total income taxes |  | $ | 21,045 |  | $ | 38,052 |  | $ | 22,144
The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 21% in 2018 and 35% in 2017 and 2016 to income before income taxes consists of the following:
|  | December 31, |  |  |  |
(in thousands) |  | 2018 |  | 2017 |  | 2016
Income tax expense at statutory rates |  | $ | 19,851 |  | $ | 28,828 |  | $ | 21,766
Increase (reduction) from: |  |  |  |  |  |
Jurisdictional rate differences |  | 719 |  | (1,863) |  | (1,936)
Valuation allowance |  | (267) |  | 308 |  | 1,731
Stock based compensation |  | (205) |  | (778) |  | 275
U.S. state taxes |  | 3,917 |  | 2,463 |  | 1,295
Domestic production deduction |  | — |  | (1,039) |  | (618)
R&D credit |  | (531) |  | (500) |  | (329)
GILTI |  | 673 |  | — |  | —
Other, net |  | 219 |  | 397 |  | (40)
Provision for income taxes before tax reform |  | $ | 24,376 |  | $ | 27,816 |  | $ | 22,144
Effective tax rate before effects of tax reform |  | 26 | % |  | 34 | % |  | 36 | %
Tax Reform: |  |  |  |  |  |
Rate change of deferreds |  | 1,200 |  | (3,334) |  | —
Transition tax on deemed repatriation |  | (4,531) |  | 13,104 |  | —
Other |  | — |  | 466 |  | —
Impact of tax reform |  | $ | (3,331) |  | $ | 10,236 |  | $ | —
Provision for income tax |  | $ | 21,045 |  | $ | 38,052 |  | $ | 22,144
Effective tax rate |  | 22 | % |  | 46 | % |  | 36 | %
Deferred Income Tax Assets and Liabilities Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:
|  | December 31, |  |
(in thousands) |  | 2018 |  | 2017
Deferred income tax assets: |  |  |  |
Inventory basis difference |  | $ | 1,825 |  | $ | 571
Accounts receivable reserve |  | 251 |  | 310
Rental equipment and Property, plant and equipment |  | 56 |  | 4
Stock based compensation |  | 672 |  | 549
Pension liability |  | 3,204 |  | 2,859
Employee benefit accrual |  | 1,911 |  | 2,193
Product liability and warranty reserves |  | 1,294 |  | 1,211
Foreign net operating loss |  | 4,164 |  | 4,266
State net operating loss |  | 148 |  | 286
Foreign tax credit |  | — |  | 4,106
Other |  | (156) |  | 216
Total deferred income tax assets |  | $ | 13,369 |  | $ | 16,571
Less: Valuation allowance |  | (3,696) |  | (8,519)
Net deferred income tax assets |  | $ | 9,673 |  | $ | 8,052
Deferred income tax liabilities: |  |  |  |
Rental equipment and Property, plant and equipment |  | (9,928) |  | (7,477)
Intangible assets |  | (8,944) |  | (7,064)
Expenses not currently deductible for book purposes |  | (749) |  | (887)
Total deferred income tax liabilities |  | $ | (19,621) |  | $ | (15,428)
Net deferred income taxes |  | $ | (9,948) |  | $ | (7,376)
As of December 31, 2018, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions’ net operating loss carry-forwards are approximately $9,499,000 with an unlimited carry-forward period, and $5,100,000 with a carry-forward expiring in 2035. The Company also has U.S. state net operating loss carry-forwards in the amount of $4,602,000 which will expire between 2019 and 2029. We have recorded a valuation allowance as of December 31, 2018 and 2017 due to uncertainties related to our ability to utilize some of the deferred income tax assets, primarily consisting of international operating losses and foreign tax credits generated by the transition tax, before they expire. The valuation allowance is based on estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. During 2018, the valuation allowance decreased $4.8 million, primarily due to $4.1 million of foreign tax credits that the company was able to utilize to offset foreign source income and reduce the one-time transition tax. Unrecognized Tax Benefits Unrecognized tax benefits in the amount of $236,000 and $234,000 for 2018 and 2017, respectively, are included in other non-current liabilities on the balance sheet. The unrecognized tax benefits, if recognized, would favorably impact our effective tax rate in a future period. We do not expect our unrecognized tax benefits disclosed above to change significantly over the next 12 months.
Unrecognized Tax Benefits |  |  |  |
|  | December 31, |  |
|  | 2018 |  | 2017
Balance as of beginning of year |  | $ | 234,000 |  | $ | 235,000
Additions for tax positions related to the current year |  | 63,000 |  | 62,000
Additions for tax positions related to prior years |  | — |  | —
Reduction due to lapse of statute of limitations |  | (61,000) |  | (63,000)
Balance as of end of year |  | $ | 236,000 |  | $ | 234,000
The Company adopted the policy to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2018, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2013 through 2018. The Company’s open tax years for its foreign income tax returns are for the tax years ended 2011 through 2018. The Company is currently under audit for tax years 2014 and 2015 for the State of New York and for tax year 2011 and 2016 for certain subsidiaries in Canada. The Company previously considered substantially all of the earnings in our foreign subsidiaries to be permanently reinvested and, accordingly, recorded no deferred income taxes on such earnings. As a result of the fundamental changes to the taxation of multinational corporations created by TCJA, we no longer intend to permanently reinvest all of the historical undistributed earnings of our foreign affiliates. We will distribute earnings from our European subsidiaries, while maintaining our permanent reinvestment for our other foreign subsidiaries. There will generally be no U.S. corporate taxes imposed on such future distributions of foreign earnings or foreign withholding and other local taxes. For the amounts we continue to assert permanent reinvestment, if the amounts were distributed, the company would be subject to approximately $3,326,000 in withholding taxes.

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