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Note 17 - Income Taxes | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
| 17. | Income Taxes
Income (loss) before income taxes for the three years ended December 31 was as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. operations |  | $ | 47.5 |  |  | $ | 46.6 |  |  | $ | 50.1 |
Foreign operations |  |  | 26.6 |  |  |  | (5.5 | ) |  |  | 3.9 |
Total |  | $ | 74.1 |  |  | $ | 41.1 |  |  | $ | 54.0 |
Income tax expense (benefit) for the three years ended December 31 was as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11.1 |  |  | $ | 4.2 |  |  | $ | 9.6 |
Foreign |  |  | 11.2 |  |  |  | 3.8 |  |  |  | 5.6 |
State |  |  | 1.9 |  |  |  | 1.8 |  |  |  | 2.1 |
Total current |  | $ | 24.2 |  |  | $ | 9.8 |  |  | $ | 17.3 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 0.6 |  |  | $ | 4.4 |  |  | $ | (2.4 | )
Foreign |  |  | (15.5 | ) |  |  | (6.9 | ) |  |  | (6.7 | )
State |  |  | (0.1 | ) |  |  | 0.1 |  |  |  | (0.1 | )
Total deferred |  | $ | (15.0 | ) |  | $ | (2.4 | ) |  | $ | (9.2 | )
Total: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11.7 |  |  | $ | 8.6 |  |  | $ | 7.2 |
Foreign |  |  | (4.3 | ) |  |  | (3.1 | ) |  |  | (1.1 | )
State |  |  | 1.8 |  |  |  | 1.9 |  |  |  | 2.0 |
Total income tax expense |  | $ | 9.2 |  |  | $ | 7.4 |  |  | $ | 8.1 |
In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or immaterial. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately $83.9 million of undistributed earnings from foreign subsidiaries to the United States as those earnings continue to be permanently reinvested. Our effective income tax rate varied from the U.S. federal statutory tax rate for the three years ended December 31 as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
Tax at statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Increases (decreases) in the tax rate from: |  |  |  |  |  |  |  |  |  |  |  |
State and local taxes, net of federal benefit |  |  | 2.2 |  |  |  | 3.5 |  |  |  | 1.9 |
Effect of foreign operations |  |  | (6.3 | ) |  |  | (3.7 | ) |  |  | 3.5 |
Effect of changes in valuation allowances |  |  | (4.5 | ) |  |  | 0.5 |  |  |  | (9.7 | )
Excess tax benefits on share-based compensation |  |  | 1.8 |  |  |  | 2.1 |  |  |  | 2.5 |
Share-based payments |  |  | (0.9 | ) |  |  | (0.9 | ) |  |  | (2.0 | )
Research and development credit |  |  | (1.4 | ) |  |  | (3.3 | ) |  |  | (1.9 | )
Other, net |  |  | 0.6 |  |  |  | (1.3 | ) |  |  | (0.2 | )
Effective income tax rate |  |  | 12.5 | % |  |  | 17.9 | % |  |  | 15.1 | %
Deferred tax assets and liabilities were comprised of the following as of December 31:
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventory |  | $ | 3.7 |  |  | $ | 4.5 |
Compensation and employee benefits |  |  | 14.8 |  |  |  | 14.0 |
Warranty reserves |  |  | 2.2 |  |  |  | 2.3 |
Allowance for doubtful accounts and deferred revenue |  |  | 2.3 |  |  |  | 2.3 |
Operating lease liabilities |  |  | 8.2 |  |  |  | 11.2 |
Tax loss carryforwards |  |  | 7.7 |  |  |  | 9.6 |
Tax credit carryforwards |  |  | 4.5 |  |  |  | 3.6 |
Other |  |  | 0.7 |  |  |  | 2.5 |
Gross deferred tax assets |  | $ | 44.1 |  |  | $ | 50.0 |
Less: valuation allowance |  |  | (4.8 | ) |  |  | (7.5 | )
Total net deferred tax assets |  | $ | 39.3 |  |  | $ | 42.5 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Operating lease assets |  | $ | 8.1 |  |  | $ | 11.2 |
Fixed assets |  |  | 13.0 |  |  |  | 14.0 |
Goodwill and intangible assets |  |  | 23.0 |  |  |  | 41.5 |
Total deferred tax liabilities |  | $ | 44.1 |  |  | $ | 66.7 |
Net deferred tax liabilities |  | $ | (4.8 | ) |  | $ | (24.2 | )
Tax credit carryforwards consist of $3.2 million U.S. federal and state tax credits and $1.3 million of Netherlands tax credits. We have non-U.S. cumulative tax losses of $30.8 million in various countries. Cumulative losses can be used to offset the income tax liabilities on future income in these countries. $30.8 million of these losses have unlimited carryforward periods. Less than $0.1 million of these losses have a limited carryforward period. The valuation allowance as of December 31, 2021 principally applies to tax credit carryforwards in the Netherlands and certain U.S. states which, in the opinion of management, are more likely than not to expire unutilized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. As of December 31, 2021, we believe it is more likely than not that the remainder of our deferred tax assets are realizable. We recorded a net valuation allowance release in 2021 of $2.7 million on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized. The net decrease in the valuation allowance was primarily driven by a law change in the Netherlands providing an unlimited carryover period for net operating losses. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2021 |  |  | 2020 |
Beginning balance |  | $ | 6.4 |  |  | $ | 7.5 |
(Decreases) increases as a result of tax positions taken during a prior period |  |  | (0.1 | ) |  |  | 0.3 |
Increases as a result of tax positions taken during the current year |  |  | 0.5 |  |  |  | 0.4 |
Decreases relating to settlement with tax authorities |  |  | — |  |  |  | (0.8 | )
Decreases as a result of a lapse of the applicable statute of limitations |  |  | (2.1 | ) |  |  | (1.4 | )
Increases as a result of foreign currency fluctuations |  |  | — |  |  |  | 0.4 |
Ending balance |  | $ | 4.7 |  |  | $ | 6.4 |
Included in the balance of unrecognized tax benefits as of December 31, 2021 and 2020 are potential benefits of $4.5 million and $6.3 million, respectively, that if recognized, would affect the effective tax rate. We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. In addition to the liability of $4.7 million and $6.4 million for unrecognized tax benefits as of December 31, 2021 and 2020, there was approximately $0.7 million and $0.7 million, respectively, for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amounts accrued will be revised and reflected as an adjustment to income tax expense. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2018. The number of years which remain open for audit for U.S. state or foreign tax purposes varies by jurisdiction but generally ranges from 3-5 years. We are currently undergoing income tax examinations in various foreign jurisdictions. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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