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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
9. | INCOME TAXES
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2017 and for state examinations before 2014. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2010 in Asia and generally 2012 in Europe. At December 31, 2020 and 2019, the Company has approximately $28.5 million and $29.1 million, respectively, of liabilities for uncertain tax positions ($2.4 million and $2.2 million, respectively, is included in other current liabilities on the consolidated balance sheets and $26.1 million and $26.9 million, respectively, is included in liability for uncertain tax positions on the consolidated balance sheets). These amounts, if recognized, would reduce the Company’s effective tax rate. As of December 31, 2020, approximately $2.4 million of the Company’s liabilities for uncertain tax positions are expected to be resolved during the next twelve months by way of expiration of the related statute of limitations. A reconciliation of the beginning and ending amount of the liability for uncertain tax positions, including the portion included in income taxes payable, is as follows:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Liability for uncertain tax positions - January 1 |  | $ | 29,061 |  |  | $ | 28,951 |
Additions based on tax positions related to the current year |  |  | 764 |  |  |  | 1,738 |
Translation adjustment |  |  | 887 |  |  |  | (211 | )
Settlement/expiration of statutes of limitations |  |  | (2,196 | ) |  |  | (1,417 | )
Liability for uncertain tax positions - December 31 |  | $ | 28,516 |  |  | $ | 29,061 |
The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. During the years ended December 31, 2020 and 2019, the Company recognized $0.8 million and $0.7 million, respectively, in interest and penalties in the consolidated statements of operations. During the years ended December 31, 2020 and 2019, the Company recognized a benefit of $0.5 million and $0.7 million, respectively, for the reversal of such interest and penalties, relating to the expiration of statues of limitations and settlement of the acquired liability for uncertain tax positions, respectively. The Company has approximately $5.2 million and $4.9 million accrued for the payment of interest and penalties at December 31, 2020 and 2019, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the consolidated balance sheets. The Company’s total earnings (loss) before provision for income taxes included losses from domestic operations of ($6.0) million and ($17.1) million for 2020 and 2019, respectively, and earnings before provision for income taxes from foreign operations of $18.1 million and $9.8 million for 2020 and 2019, respectively. The provision (benefit) for income taxes consists of the following:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (1,555 | ) |  | $ | (215 | )
State |  |  | 168 |  |  |  | 141 |
Foreign |  |  | 2,472 |  |  |  | 3,687 |
|  |  | 1,085 |  |  |  | 3,613 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (1,412 | ) |  |  | (2,222 | )
State |  |  | (151 | ) |  |  | (135 | )
Foreign |  |  | (181 | ) |  |  | 185 |
|  |  | (1,744 | ) |  |  | (2,172 | )
|  | $ | (659 | ) |  | $ | 1,441 |
A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
|  | $ |  |  | % |  |  | $ |  |  | % |
Tax provision (benefit) computed at the federal statutory rate |  | $ | 2,549 |  |  |  | 21 | % |  | $ | (1,534 | ) |  |  | 21 | %
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Different tax rates applicable to foreign operations |  |  | 311 |  |  |  | 3 | % |  |  | 2,978 |  |  |  | (41 | %)
(Reversal of) increase in liability for uncertain tax positions - net |  |  | (1,432 | ) |  |  | (12 | %) |  |  | 320 |  |  |  | (4 | %)
Impact of U.S. Tax Reform |  |  | (1,129 | ) |  |  | (9 | %) |  |  | - |  |  |  | 0 | %
Research and experimentation and foreign tax credits |  |  | (245 | ) |  |  | (2 | %) |  |  | (907 | ) |  |  | 12 | %
State taxes, net of federal benefit |  |  | 4 |  |  |  | 0 | % |  |  | (54 | ) |  |  | 1 | %
SERP/COLI and restricted stock income |  |  | (234 | ) |  |  | (2 | %) |  |  | (547 | ) |  |  | 7 | %
Impairment of goodwill |  |  | - |  |  |  | 0 | % |  |  | 1,522 |  |  |  | (21 | %)
Other, net |  |  | (483 | ) |  |  | (4 | %) |  |  | (337 | ) |  |  | 5 | %
Tax (benefit) provision computed at the Company's effective tax rate |  | $ | (659 | ) |  |  | (5 | %) |  | $ | 1,441 |  |  |  | (20 | %)
As of December 31, 2020, the Company has $22.9 million of deferred tax assets, which the Company evaluates for utilization on an annual basis. The Company has gross federal, state and foreign net operating losses (“NOL”) of $27.5 million which amount to $5.9 million of deferred tax assets. In addition, the Company has $2.6 million of credit carryforwards and acquired deferred tax assets of $0.6 million. The Company believes that it is more likely than not that the benefit arising from certain NOL, credit carryforwards and acquisition assets will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $6.3 million on these deferred tax assets. The federal and certain foreign NOL's can be carried forward indefinitely, the state and certain foreign NOL's expire at various times during 2025 – 2040 and the tax credit carryforwards expire at various times during 2028 - 2040. Management has no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiaries as of December 31, 2020. Applicable income and dividend withholding taxes of $0.2 million have been reflected in the accompanying consolidated statements of operations for the year ended December 31, 2020. Due to the practicality of determining the deferred taxes on outside basis differences in our investments in our foreign subsidiaries, we have not provided for deferred taxes on outside basis differences and deemed that these basis differences will be indefinitely reinvested. Components of deferred income tax assets are as follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | Tax Effect |  |  | Tax Effect |
Deferred tax assets: |  |  |  |  |  |  |  |
State tax credits |  | $ | 757 |  |  | $ | 1,046 |
Unfunded pension liability |  |  | 1,840 |  |  |  | 1,102 |
Reserves and accruals |  |  | 3,181 |  |  |  | 2,721 |
Federal, state and foreign net operating loss and credit carryforwards |  |  | 7,744 |  |  |  | 8,042 |
Depreciation |  |  | 604 |  |  |  | 686 |
Amortization |  |  | 142 |  |  |  | 698 |
Lease accounting |  |  | 3,217 |  |  |  | 3,961 |
Other accruals |  |  | 5,452 |  |  |  | 5,079 |
Total deferred tax assets |  |  | 22,937 |  |  |  | 23,335 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | 1,992 |  |  |  | 1,901 |
Amortization |  |  | 6,541 |  |  |  | 6,973 |
Lease accounting |  |  | 3,110 |  |  |  | 3,871 |
Other accruals |  |  | 330 |  |  |  | 370 |
Total deferred tax liabilities |  |  | 11,973 |  |  |  | 13,115 |
Valuation allowance |  |  | 6,289 |  |  |  | 8,216 |
Net deferred tax assets |  | $ | 4,675 |  |  | $ | 2,004 |
The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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