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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes [Abstract] |
Income Taxes | 12. Income Taxes ﻿ Income Tax Expense ﻿ Income before income taxes consists of the following (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |
﻿ | 2016 |  | 2015 |  | 2014
﻿Domestic | $ | 17,874 |  | $ | 5,701 |  | $ | 8,350
﻿Foreign |  | 538 |  |  | 167 |  |  | 353
﻿Income before income taxes | $ | 18,412 |  | $ | 5,868 |  | $ | 8,703
﻿ Income tax expense consists of the following (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |
﻿ | 2016 |  | 2015 |  | 2014
﻿Current: |  |  |  |  |  |  |  |
﻿Federal | $ | 3,948 |  | $ | 231 |  | $ | 898
﻿State |  | 626 |  |  | 142 |  |  | 211
﻿Foreign |  | 353 |  |  | 160 |  |  | 99
﻿ |  | 4,927 |  |  | 533 |  |  | 1,208
﻿Deferred: |  |  |  |  |  |  |  |
﻿Federal |  | 2,836 |  |  | 1,011 |  |  | 127
﻿State |  | (9) |  |  | 319 |  |  | 46
﻿Foreign |  | (120) |  |  | -- |  |  | --
﻿ |  | 2,707 |  |  | 1,330 |  |  | 173
﻿Income tax expense | $ | 7,634 |  | $ | 1,863 |  | $ | 1,381
﻿ The Company’s income tax expense in 2016, 2015, and 2014 included the Company’s federal, state, and foreign tax obligations. The Company’s effective income tax rate was approximately 41%, 32%, and 16% for the years ended December 31, 2016, 2015, and 2014, respectively. The Company’s income tax rate for the twelve months ended December 31, 2016 was unfavorably impacted by the tax treatment of certain expenses related to the On-X acquisition, which had a larger impact on the tax rate in the first quarter of 2016, and by book/tax basis differences related to the HeRO Sale. The Company’s income tax rate for the twelve months ended December 31, 2015 was favorably affected by the reversal of $869,000 in uncertain tax positions, primarily related to research and development tax credits for which the statute of limitations has expired, partially offset by the expiration of certain state net operating losses and other permanent differences. The Company’s income tax rate for the twelve months ended December 31, 2014 was favorably affected by the reduction in uncertain tax positions, nontaxable gains recorded as change in stock basis of subsidiary, and favorable deductions taken on the Company’s 2013 federal tax return, which was filed in 2014. ﻿ The income tax expense amounts differ from the amounts computed by applying the U.S. federal statutory income tax rate of 35% for the year ended December 31, 2016 and 34% for the years ended December 31, 2015 and 2014 to pretax income as a result of the following (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |
﻿ | 2016 |  | 2015 |  | 2014
﻿Tax expense at statutory rate | $ | 6,444 |  | $ | 1,995 |  | $ | 2,959
﻿Increase (reduction) in income taxes resulting from: |  |  |  |  |  |  |  |
﻿Non-Deductible transaction costs |  | 908 |  |  | -- |  |  | --
﻿State income taxes, net of federal benefit |  | 531 |  |  | 499 |  |  | 220
﻿Non-deductible loss on unit disposals |  | 455 |  |  | -- |  |  | --
﻿Non-deductible entertainment expenses |  | 221 |  |  | 184 |  |  | 218
﻿Equity compensation |  | 135 |  |  | 144 |  |  | 63
﻿Foreign income taxes |  | 130 |  |  | 118 |  |  | 69
﻿Provision to return adjustments |  | 29 |  |  | 122 |  |  | (321)
﻿Non-deductible change in stock basis of subsidiary |  | -- |  |  | -- |  |  | (641)
﻿Domestic production activities deduction |  | (456) |  |  | (87) |  |  | (153)
﻿Research and development credit |  | (296) |  |  | (281) |  |  | (237)
﻿Net change in uncertain tax positions |  | (153) |  |  | (869) |  |  | (781)
﻿State valuation allowance adjustment |  | (84) |  |  | (19) |  |  | 83
﻿Other |  | (230) |  |  | 57 |  |  | (98)
﻿Total Income tax expense | $ | 7,634 |  | $ | 1,863 |  | $ | 1,381
﻿ Deferred Taxes ﻿ The Company generates deferred tax assets primarily as a result of write-downs of inventory and deferred preservation costs; accruals for product and tissue processing liability claims; investment and asset impairments; and, in prior periods, due to operating losses. The Company acquired significant deferred tax assets, primarily net operating loss carryforwards, from its acquisitions of On-X in 2016, Hemosphere in 2012, and Cardiogenesis in 2011. The Company recorded significant deferred tax liabilities in 2016 related to the intangible assets acquired in the On-X acquisition. ﻿ The tax effects of temporary differences which give rise to deferred tax assets and liabilities at December 31 are as follows (in thousands): ﻿
﻿ |  |  |  |  |
﻿ | 2016 |  | 2015
﻿Deferred tax assets: |  |  |  |  |
﻿Allowance for bad debts | $ | 208 |  | $ | 142
﻿Inventory and deferred preservation costs write-downs |  | 708 |  |  | 536
﻿Investment in equity securities |  | 58 |  |  | 58
﻿Property |  | 1,780 |  |  | 2,987
﻿Intangible assets |  | 2,034 |  |  | 591
﻿Accrued expenses |  | 4,215 |  |  | 3,276
﻿Loss carryforwards |  | 8,760 |  |  | 12,262
﻿Credit carryforwards |  | 1,001 |  |  | 616
﻿Stock compensation |  | 3,678 |  |  | 2,546
﻿Transaction costs |  | 122 |  |  | 1,048
﻿Deferred compensation |  | 973 |  |  | 957
﻿UNICAP |  | 371 |  |  | 55
﻿Tax benefit of tax reserves |  | 333 |  |  | 53
﻿Other |  | 409 |  |  | 382
﻿Less valuation allowance |  | (2,157) |  |  | (2,109)
﻿Total deferred tax assets |  | 22,493 |  |  | 23,400
﻿ |  |  |  |  |
﻿ | 2016 |  | 2015
﻿Deferred tax liabilities: |  |  |  |  |
﻿Prepaid items |  | (436) |  |  | (471)
﻿Intangible assets |  | (21,665) |  |  | (4,400)
﻿Other |  | (399) |  |  | (341)
﻿Total deferred tax liabilities |  | (22,500) |  |  | (5,212)
﻿ |  |  |  |  |
﻿Total net deferred tax (liabilities) assets | $ | (7) |  | $ | 18,188
﻿ As of December 31, 2016 the Company maintained a total of $2.2 million in valuation allowances against deferred tax assets, related to state net operating loss carryforwards, and a net deferred tax liability of $7,000. As of December 31, 2015 the Company maintained a total of $2.1 million in valuation allowances against deferred tax assets, related to state net operating loss carryforwards, and a net deferred tax asset of $18.2 million. ﻿ As of December 31, 2016 the Company had approximately $6.3 million tax-effected federal net operating loss carryforwards related to the acquisitions of Cardiogenesis and Hemosphere that will begin to expire in 2017, $2.4 million of tax-effected state net operating loss carryforwards that began to expire in 2016, $702,000 in research and development tax credit carryforwards that will begin to expire in 2022, and $150,000 in credits from the state of Texas that will fully expire by 2027. ﻿ Uncertain Tax Positions ﻿ A reconciliation of the beginning and ending balances of the Company’s uncertain tax position liability, excluding interest and penalties, is as follows (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |
﻿ | 2016 |  | 2015 |  | 2014
﻿Beginning balance | $ | 969 |  | $ | 1,437 |  | $ | 2,100
﻿Increases related to current year tax positions |  | 86 |  |  | 103 |  |  | 92
﻿Increases related to prior year tax positions |  | 2,668 |  |  | 403 |  |  | --
﻿Decreases related to prior year tax positions |  | (40) |  |  | (70) |  |  | (265)
﻿Decreases related to settlements |  | (66) |  |  | -- |  |  | --
﻿Decreases due to the lapsing of statutes of limitations |  | (227) |  |  | (904) |  |  | (490)
﻿Ending balance | $ | 3,390 |  | $ | 969 |  | $ | 1,437
﻿ A reconciliation of the beginning and ending balances of the Company’s liability for interest and penalties on uncertain tax positions is as follows (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |
﻿ | 2016 |  | 2015 |  | 2014
﻿Beginning balance | $ | 210 |  | $ | 366 |  | $ | 422
﻿Accrual of interest and penalties |  | 92 |  |  | 50 |  |  | 91
﻿Decreases related to prior year tax positions |  | (94) |  |  | (206) |  |  | (147)
﻿Ending balance | $ | 208 |  | $ | 210 |  | $ | 366
﻿ As of December 31, 2016 the Company’s uncertain tax liability, including interest and penalties, of $3.6 million, was recorded as a reduction to deferred tax assets of $234,000, and a non-current liability of $3.4 million on the Company’s Consolidated Balance Sheets, all of which, except for the portion related to interest and penalties, is expected to impact the Company’s tax rate when recognized. The uncertain tax position increase related to prior year tax positions is primarily due to positions taken by On-X on tax returns in prior years. As of December 31, 2015 the Company’s total uncertain tax liability, including interest and penalties of $1.2 million, was recorded as a reduction to deferred tax assets of $104,000, and a non-current liability of $1.1 million on the Company’s Consolidated Balance Sheets, all of which, except for the portion related to interest and penalties, is expected to impact the Company’s tax rate when recognized. ﻿ The Company believes it is reasonably possible that approximately $235,000 of its uncertain tax liability will be recognized in 201 7 due to the lapsing of various federal and state statutes of limitations. Other ﻿ The Company’s tax years 2013 through 2015 generally remain open to examination by the major taxing jurisdictions to which the Company is subject. However, certain returns from years prior to 2013, in which net operating losses and tax credits have arisen, are still open for examination by the tax authorities.

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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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