XML 35 R15.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes from continuing operations consists of:
| Year ended December 31, (in thousands)
| 2017 |  | 2016
Current income tax: |  |  |
Federal | $ | — |  |  | $ | 61 |
State | 122 |  |  | 167 |
Foreign | 227 |  |  | 211 |
| 349 |  |  | 439 |
Deferred income tax: |  |  |
Federal | 4,029 |  |  | 768 |
State | (381 | ) |  | (60 | )
| 3,648 |  |  | 708 |
Provision for income taxes | $ | 3,997 |  |  | $ | 1,147 |
The deferred tax expense related to discontinued operations was $0.1 million in fiscal year 2017 and a benefit of $0.4 million recorded in fiscal year 2016. Deferred tax liabilities (assets) are comprised of the following at:
| December 31, (in thousands)
| 2017 |  | 2016
Deferred tax liabilities: |  |  |
Software development costs | $ | 2,119 |  |  | $ | 2,223 |
Acquired intangible assets | 913 |  |  | 1,731 |
Gross deferred tax liabilities | 3,032 |  |  | 3,954 |
Allowances for bad debts and inventory | (2,958 | ) |  | (4,505 | )
Capitalized inventory costs | (109 | ) |  | (104 | )
Intangible assets | (672 | ) |  | (1,388 | )
Employee benefit accruals | (1,282 | ) |  | (2,089 | )
Federal net operating loss carryforward | (4,941 | ) |  | (5,820 | )
State net operating loss carryforward | (1,540 | ) |  | (1,085 | )
Tax credit carryforwards | (6,064 | ) |  | (6,888 | )
Foreign currency | (33 | ) |  | (33 | )
Other | (895 | ) |  | (1,333 | )
Gross deferred tax assets | (18,494 | ) |  | (23,245 | )
Less valuation allowance | 1,653 |  |  | 1,874 |
Net deferred tax assets | $ | (13,809 | ) |  | $ | (17,417 | )
The Company has Federal tax credit carryforwards of $5.7 million that expire in various tax years from 2018 to 2036. The Company has a Federal operating loss carryforward of $5.0 million that expires in various tax years through 2034. None of the operating loss carryforward will result in a benefit within additional paid in capital when realized. The Company also has state tax credit carryforwards of $0.3 million and state net operating loss carryforwards of $1.5 million that expire in various tax years through 2034. In assessing the ability to realize 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 the temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result of this analysis and based on the current year’s taxable income, and utilization of certain carryforwards management determined an increase in the valuation allowance in the current year to be appropriate. A valuation allowance is still required to the extent it is more likely than not that the future benefit associated with the foreign tax credit carryforwards and certain state tax loss carryforwards will not be realized. The Company recorded a tax expense associated with an increase of the deferred tax asset valuation allowance of $25,000 for 2017. Included in the Company's consolidated statement of operations is a one-time adjustment to the value of the deferred tax asset of $4.5 million related to the decrease in the corporate tax rate included in the Tax Cuts and Jobs Act of 2017. On December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act. While we are able to make reasonable estimates of the impact of the reduction in corporate rate and the deemed repatriation transition tax, the final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the I.R.S., and actions we may take. We are continuing to gather additional information to determine the final impact. The Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result all previously unremitted earnings for which no U.S. deferred liability has been accrued is now subject to U.S. tax. As a result, the Company recorded a one-time reduction of the deferred tax asset of $0.4 million related to the one-time mandatory tax of previously deferred foreign earnings which is payable over an 8-year period. The Company records the benefits relating to uncertain tax positions only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. At 2017, the Company’s reserve for uncertain tax positions is not material and we believe we have adequately provided for its tax-related liabilities. The Company is no longer subject to United States federal income tax examinations for years before 2013. The provision for income taxes differed from the provision computed by applying the Federal statutory rate to income (loss) from continuing operations before taxes due to the following:
| Year ended December 31,
| 2017 |  | 2016
Federal statutory tax rate | 34.0 | % |  | 34.0 | %
State taxes | (0.9 | ) |  | 1.4 |
Non deductible expenses | 19.4 |  |  | 2.7 |
Tax credits | (90.6 | ) |  | (6.7 | )
Stock based compensation | (69.6 | ) |  | — |
Foreign income tax rate differential | (14.0 | ) |  | (2.1 | )
Repatriation Tax | 110.5 |  |  | — |
Impact of Tax Cuts and Jobs Act enactment | 1,241.0 |  |  | — |
Valuation allowance | — |  |  | 0.1 |
Tax return and audit adjustments | (107.3 | ) |  | — |
Contingent purchase revaluation | (88.0 | ) |  | — |
Other | (1.7 | ) |  | 2.0 |
| 1,032.8 | % |  | 31.4 | %
The effective income tax rate was 1,032.8% and 31.4% during the years ended December 31, 2017 and December 31, 2016, respectively. The effective tax rate in any reporting period can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective tax rate for the year ended December 31, 2017 was significantly impacted by recording the impact of the Tax Cuts and Jobs Act (the “Tax Act”) of 2017. Impacts on the Company's effective tax rate from the Tax Act include a $4.5 million or 1,241.0% increase for the federal income tax rate change from 34% to 21% as well as a $0.4 million or 110.5% increase for the one-time repatriation tax on accumulated foreign earnings.

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://www.xbrl.org/2003/role/presentationRef -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