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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
14. | Income Taxes
On December 22, 2017, the Tax Act was signed into law making significant changes to the U.S. tax code. Changes affecting the Company’s consolidated 2017 financial statements include, but are not limited to, a U.S. federal corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017 and a one-time transition tax, payable over eight years, on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. On December 22, 2017, the SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, the Company has recognized provisional amounts related to the tax effects of the Tax Act for which the Company was able to make reasonable estimates. For the provisions of the Tax Act for which the Company was unable to determine a provisional amount, the Company has continued to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. Tax effects of the Tax Act will be recognized or adjusted as additional implementation guidance is released and analyses are finalized, but no later than the end of the measurement period prescribed by SAB 118, which is one year from the enactment date of the Tax Act. The provisional amount recorded related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was a net benefit of $4.8 million. The provisional amount recorded related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was a charge of $6.4 million. The Company has not historically claimed significant Foreign Tax Credits. An estimate of potential Foreign Tax Credits available to offset the one-time transition tax has not been made and no provisional amount is provided. The Company has not historically recorded deferred income taxes on the undistributed earnings of its foreign subsidiaries because of management’s intent to indefinitely reinvest such earnings. As of December 31, 2017, Management has not changed its intent to indefinitely reinvest such earnings, but the Tax Act could cause management to reevaluate this position in the future. The Tax Act subjected all previously untaxed earnings and profits of our controlled foreign corporations to a one-time mandatory repatriation tax. Future distributions of these earnings in the form of dividends or otherwise would no longer be subject to U.S. income taxes. State taxes, as well as foreign withholding taxes, could apply to distributions of earnings from foreign jurisdictions. Since the foreign earnings remain permanently reinvested in the Company’s foreign operations, no liability has been established for potential withholding taxes or other costs that would be incurred if the earnings were repatriated. As of December 31, 2017, aggregate undistributed earnings of foreign subsidiaries totaled approximately $15.4M. The unrecognized deferred income tax liability on this temporary difference is estimated to be approximately $1.0 million. Income (loss) before income taxes was generated in the United States and globally as follows:
(Table only in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Domestic |  | $ | 3,891 |  |  | $ | (39,623 | ) |  | $ | 997 |
Foreign |  |  | (2,482 | ) |  |  | 6,659 |  |  |  | (4,093 | )
|  | $ | 1,409 |  |  | $ | (32,964 | ) |  | $ | (3,096 | )
Income tax provision consisted of the following for the years ended December 31:
(Table only in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 6,234 |  |  | $ | 4,957 |  |  | $ | 3,429 |
State |  |  | 388 |  |  |  | 892 |  |  |  | 753 |
Foreign |  |  | 939 |  |  |  | 3,191 |  |  |  | 1,944 |
|  |  | 7,561 |  |  |  | 9,040 |  |  |  | 6,126 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,479 | ) |  |  | (2,794 | ) |  |  | (3,012 | )
State |  |  | 114 |  |  |  | (409 | ) |  |  | (563 | )
Foreign |  |  | (758 | ) |  |  | (547 | ) |  |  | 87 |
|  |  | (3,123 | ) |  |  | (3,750 | ) |  |  | (3,488 | )
|  | $ | 4,438 |  |  | $ | 5,290 |  |  | $ | 2,638 |
The income tax provision differs from the statutory rate due to the following:
(Table only in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Tax expense (benefit) at statutory rate |  | $ | 494 |  |  | $ | (11,525 | ) |  | $ | (1,083 | )
Increase (decrease) in tax resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State income tax, net of federal benefit |  |  | 367 |  |  |  | 174 |  |  |  | 34 |
Domestic production activities deduction |  |  | (235 | ) |  |  | (561 | ) |  |  | (211 | )
Intangible asset and goodwill impairment |  |  | 1,789 |  |  |  | 17,859 |  |  |  | — |
Change in uncertain tax position reserves |  |  | 465 |  |  |  | (624 | ) |  |  | (1,281 | )
Permanent differences |  |  | 1,026 |  |  |  | (31 | ) |  |  | 1,162 |
Impact of rate differences and adjustments |  |  | (20 | ) |  |  | (1,655 | ) |  |  | (1,489 | )
United States and foreign tax incentives |  |  | (240 | ) |  |  | (1,035 | ) |  |  | (883 | )
Non-deductible transaction costs |  |  | — |  |  |  | 7 |  |  |  | 1,356 |
Earnout (income) expense |  |  | (1,779 | ) |  |  | 2,573 |  |  |  | 3,928 |
Change in valuation allowance |  |  | 1,044 |  |  |  | 222 |  |  |  | 483 |
Audit settlements |  |  | — |  |  |  | — |  |  |  | 65 |
Provision-to-return adjustments |  |  | (495 | ) |  |  | 108 |  |  |  | 808 |
Revaluation of deferred tax assets and liabilities |  |  | (4,819 | ) |  |  | — |  |  |  | — |
Net deemed dividend on repatriation of foreign earnings |  |  | 6,426 |  |  |  | — |  |  |  | — |
Other |  |  | 415 |  |  |  | (222 | ) |  |  | (251 | )
|  | $ | 4,438 |  |  | $ | 5,290 |  |  | $ | 2,638 |
Deferred income taxes reflect the future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and tax credit carry forwards. As a result of the Tax Act, net deferred tax liabilities were remeasured as of December 31, 2017 based on a reasonable estimate of the effect of the change in the federal tax rate. The net deferred tax liabilities consisted of the following at December 31:
(Table only in thousands) |  | 2017 |  |  | 2016 |
Gross deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses and other |  | $ | 286 |  |  | $ | 3 |
Reserves on assets |  |  | 2,000 |  |  |  | 3,078 |
Share-based compensation awards |  |  | 436 |  |  |  | 1,340 |
Minimum pension / post retirement |  |  | 2,318 |  |  |  | 4,197 |
Net operating loss carry-forwards |  |  | 3,471 |  |  |  | 5,932 |
Tax credit carry-forwards |  |  | 1,634 |  |  |  | 1,634 |
Valuation allowances |  |  | (3,873 | ) |  |  | (3,135 | )
|  |  | 6,272 |  |  |  | 13,049 |
Gross deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (448 | ) |  |  | (614 | )
Goodwill and intangibles |  |  | (13,588 | ) |  |  | (23,060 | )
Prepaid expenses and inventory |  |  | (585 | ) |  |  | (785 | )
Revenue recognition |  |  | (1,861 | ) |  |  | (1,554 | )
|  |  | (16,482 | ) |  |  | (26,013 | )
Net deferred tax liabilities |  | $ | (10,210 | ) |  | $ | (12,964 | )
As of December 31, 2017, the Company has federal net operating loss carry forwards of $4.9 million, and state and local net operating loss carry forwards of $23.4 million, which expire from 2018 to 2037. The Company has recorded a valuation allowance on certain of these net operating loss carry forwards to reflect expected realization. The Company also has net operating loss carry forwards in international jurisdictions totaling $8.8 million. A full valuation allowance has been established against substantially all of these losses in international jurisdictions. As of December 31, 2017 and 2016, the Company has recorded a valuation reserve in the amount of $3.9 million and $3.1 million, respectively. The changes in the valuation allowance resulted in additional income tax expense of $1.0 million, $0.2 million, and $0.6 million in 2017, 2016, and 2015, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. Based on this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2017. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The Company accounts for uncertain tax positions pursuant to FASB ASC Topic 740. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company estimates that it may settle one or more foreign and domestic audits in the next twelve months that may result in a decrease in the amount of accrual for uncertain tax positions of up to $0.5 million. A reconciliation of the beginning and ending amount of uncertain tax position reserves included in other liabilities on the Consolidated Balance Sheets is as follows:
(Table only in thousands) |  | 2017 |  |  | 2016 |
Balance as of January 1, |  | $ | 401 |  |  | $ | 1,024 |
Additions for tax positions taken in prior years |  |  | 465 |  |  |  | — |
Statute expirations |  |  | — |  |  |  | (576 | )
Reductions of tax positions taken in prior years |  |  | — |  |  |  | (47 | )
Balance as of December 31, |  | $ | 866 |  |  | $ | 401 |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During 2017, 2016, and 2015, there was no such expense for interest and penalties. The favorable settlement of all uncertain tax positions would impact the Company’s effective income tax rate. Tax years going back to 2014 remain open for examination by Federal authorities, and back to 2012 remain open for all significant state and foreign 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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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