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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, assessing a one-time transition tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries, and implementing a territorial tax system. While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return any foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company recorded less than $0.1 million and $0.1 million of income tax expense as a result of GILTI for the years ended December 31, 2019 and 2018, respectively. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements. The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The BEAT tax had no impact on the Company's consolidated financial statements. The components of income (loss) before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):
| 2019 |  | 2018 |  | 2017
Domestic | $ | 79,619 |  |  | $ | 76,953 |  |  | $ | 78,468 |
Foreign | 5,144 |  |  | 2,992 |  |  | (560 | )
Income before taxes from continuing operations | $ | 84,763 |  |  | $ | 79,945 |  |  | $ | 77,908 |
The provision for (benefit of) income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
U.S. Federal | $ | 11,279 |  |  | $ | 9,402 |  |  | $ | 16,882 |
State | 3,551 |  |  | 3,144 |  |  | 2,479 |
Foreign | 1,539 |  |  | (1,191 | ) |  | 2,687 |
Total current | 16,369 |  |  | 11,355 |  |  | 22,048 |
Deferred: |  |  |  |  |
U.S. Federal | 2,917 |  |  | 4,158 |  |  | (7,466 | )
State | 509 |  |  | 1,047 |  |  | 1,246 |
Foreign | (123 | ) |  | (424 | ) |  | (885 | )
Total deferred | 3,303 |  |  | 4,781 |  |  | (7,105 | )
Provision for income taxes | $ | 19,672 |  |  | $ | 16,136 |  |  | $ | 14,943 |
The benefit of income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
U.S. Federal | $ | — |  |  | $ | — |  |  | $ | 219 |
State | — |  |  | — |  |  | 20 |
Foreign | — |  |  | — |  |  | — |
Benefit of income taxes | $ | — |  |  | $ | — |  |  | $ | 239 |
The provision for income taxes from continuing operations differs from the federal statutory rate of 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017 due to the following (in thousands):
| 2019 |  | 2018 |  | 2017
Statutory rate | 17,800 |  |  | 21.0 | % |  | 16,788 |  |  | 21.0 | % |  | 27,268 |  |  | 35.0 | %
State taxes, less federal effect | 3,219 |  |  | 3.8 | % |  | 3,242 |  |  | 4.1 | % |  | 2,442 |  |  | 3.1 | %
Federal tax credits | (1,967 | ) |  | (2.3 | )% |  | (3,680 | ) |  | (4.6 | )% |  | (373 | ) |  | (0.5 | )%
Excess tax benefit on stock based compensation | (961 | ) |  | (1.1 | )% |  | (2,288 | ) |  | (2.9 | )% |  | (1,415 | ) |  | (1.8 | )%
Uncertain tax positions | (260 | ) |  | (0.3 | )% |  | (3,051 | ) |  | (3.8 | )% |  | (148 | ) |  | (0.2 | )%
Executive compensation | 1,132 |  |  | 1.3 | % |  | 1,369 |  |  | 1.7 | % |  | 160 |  |  | 0.2 | %
Change in valuation allowance | 88 |  |  | 0.1 | % |  | 844 |  |  | 1.1 | % |  | 660 |  |  | 0.8 | %
Net operating loss (NOL) write down | — |  |  | — | % |  | 1,640 |  |  | 2.1 | % |  | — |  |  | — | %
Change in Indemnification Asset | — |  |  | — | % |  | 643 |  |  | 0.8 | % |  | — |  |  | — | %
Tax effect of Tax Reform Act | — |  |  | — | % |  | — |  |  | — | % |  | (12,535 | ) |  | (16.1 | )%
Domestic manufacturer's deduction | — |  |  | — | % |  | — |  |  | — | % |  | (1,578 | ) |  | (2.0 | )%
Other | 621 |  |  | 0.7 | % |  | 629 |  |  | 0.7 | % |  | 462 |  |  | 0.7 | %
| $ | 19,672 |  |  | 23.2 | % |  | $ | 16,136 |  |  | 20.2 | % |  | $ | 14,943 |  |  | 19.2 | %
Deferred tax liabilities (assets) at December 31 consist of the following (in thousands):
| 2019 |  | 2018
Depreciation | $ | 10,421 |  |  | $ | 9,886 |
Goodwill | 38,540 |  |  | 35,813 |
Intangible assets | 9,610 |  |  | 9,907 |
Foreign withholding tax | 700 |  |  | 1,182 |
Other | 7,826 |  |  | 696 |
Gross deferred tax liabilities | 67,097 |  |  | 57,484 |
Equity compensation | (9,963 | ) |  | (10,420 | )
Other | (20,049 | ) |  | (13,529 | )
Gross deferred tax assets | (30,012 | ) |  | (23,949 | )
Valuation allowances | 3,160 |  |  | 2,995 |
Deferred tax assets, net of valuation allowances | (26,852 | ) |  | (20,954 | )
Net deferred tax liabilities | $ | 40,245 |  |  | $ | 36,530 |
At December 31, 2019, the Company had total net operating loss carry forwards of $11.5 million, which included $0.5 million for federal, $10.8 million for state, and $0.2 million for foreign income tax purposes. The federal and state net operating loss carry forwards expire between 2020 and 2039. The foreign net operating loss carry forwards expire in 2022. The Company recognized a total of $0.7 million of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances, which included $0.1 million of federal and $0.6 million of state deferred tax assets. Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. The Company derecognized net operating loss carry forwards, and the corresponding valuation allowances of $1.7 million in Germany and Brazil since it exited both markets in 2018. In 2019, a valuation allowance was recorded in China. The following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):
| 2019 |  | 2018 |  | 2017
Balance as of January 1 | $ | 2,995 |  |  | $ | 2,242 |  |  | $ | 1,362 |
Cost charged to the tax provision | 173 |  |  | 2,597 |  |  | 1,505 |
Reductions | (10 | ) |  | (1,750 | ) |  | (820 | )
Currency translation | 2 |  |  | (94 | ) |  | 195 |
Balance as of December 31 | $ | 3,160 |  |  | $ | 2,995 |  |  | $ | 2,242 |
Interest (net of federal tax benefit) and penalties recognized during the years ended December 31 were (in thousands):
| 2019 |  | 2018 |  | 2017
Interest and penalties recognized as income | — |  |  | 13 |  |  | 130 |
The Company made net payments for income taxes for the following amounts for the years ended December 31 (in thousands):
| 2019 |  | 2018 |  | 2017
Payments made for income taxes, net | $ | 19,065 |  |  | $ | 15,167 |  |  | $ | 26,186 |
At December 31, 2019, the Company had approximately $35.1 million of undistributed earnings of foreign subsidiaries. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act “Tax Reform Act”. The legislation assessed a one-time tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries. In 2019, $10.0 million, net of $0.5 million of withholding tax, of previously taxed income was repatriated. The Company expects to repatriate an additional $13.3 million in cash to the U.S., net of $0.7 million of withholding tax. The funds will be used for general corporate purposes. The Company continues to maintain its assertion that all remaining foreign earnings will be indefinitely reinvested. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability related to our remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| 2019 |  | 2018 |  | 2017
Balance as of January 1 | $ | 329 |  |  | $ | 3,536 |  |  | $ | 3,466 |
Additions for tax positions of the current year | — |  |  | 15 |  |  | 99 |
Additions for tax positions of prior years | — |  |  | — |  |  | — |
Reductions for tax positions of prior years for: |  |  |  |  |
Settlements and changes in judgment | — |  |  | — |  |  | (422 | )
Lapses of applicable statute of limitations | (329 | ) |  | (3,060 | ) |  | — |
Divestitures and foreign currency translation | — |  |  | (162 | ) |  | 393 |
Balance as of December 31 | $ | — |  |  | $ | 329 |  |  | $ | 3,536 |
In 2019, the Company did not have any unrecognized tax benefits that would affect the effective tax rate, if recognized as of December 31, 2020. In 2018, the unrecognized tax benefit of $0.3 million would affect the effective tax rate, if recognized as of December 31, 2019. In 2019 and 2018, unrecognized tax benefits of $0.3 million and $3.1 million, respectively, were reversed as a result of the lapse of the statute of limitations in the respective period. In 2018, the corresponding indemnification asset was also reversed in pretax income. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to ten years. The Company's U.S. federal consolidated income tax return is under examination for 2015 through 2018.

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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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