Income Taxes

12 Months Ended

Dec. 31, 2019

Loss before income tax expense (benefit) was comprised of the following for the periods indicated (in thousands):



	Year Ended December 31,
	2019			2018			2017

United States	$	(225,653	)	$	(85,342	)	$	(167,908	)
Foreign	14,118			(8,341		)	81,369
Loss before income tax expense (benefit)	$	(211,535	)	$	(93,683	)	$	(86,539	)

Income taxes have been provided for based upon the tax laws and rates in the countries in which operations are conducted and income is earned. Components of income tax expense (benefit) consist of the following for the periods indicated (in thousands):



	Year Ended December 31,
	2019		2018			2017
Current
U.S. federal	$	—	$	—		$	—
U.S. state and local	209		7			(15		)
Foreign	21,975		11,677			10,516
Total current	22,184		11,684			10,501

Deferred
U.S. federal	444		—			56,621
U.S. state and local	—		—			2,420
Foreign	1,166		(14,634		)	3,376
Total deferred	1,610		(14,634		)	62,417
Total income tax expense (benefit)	$	23,794	$	(2,950	)	$	72,918

For the year ending December 31, 2017, the Company reported, on a provisional basis, the tax impacts resulting from the enactment of the Tax Act on December 22, 2017. During 2018, the Company completed its analysis of the impacts of the Tax Act during the measurement period without further adjustment. The Company has completed the accounting for the impacts of the Tax Act, although adjustments may be necessary in future periods due to technical corrections and/or regulatory guidance that may be issued by the Internal Revenue Service.

Foreign taxes were incurred in the following regions for the periods indicated (in thousands):



	Year Ended December 31,
	2019		2018			2017

Latin America	$	8,636	$	1,261		$	5,469
West Africa	4,688		2,692			3,243
Middle East	5,579		2,249			1,633
Europe	1,096		461			1,348
Asia Pacific	1,525		922			1,388
Other	1,617		(10,542		)	812
Total foreign income tax expense (benefit)	$	23,141	$	(2,957	)	$	13,893

A reconciliation of the differences between the income tax provision computed at the 21% U.S. statutory rate in effect at December 31, 2019 and the reported provision for income taxes for the periods indicated is as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017

Income tax expense (benefit) at statutory rate	$	(44,422	)	$	(19,673	)	$	(30,289	)
Branch profits tax	(12,129		)	(4,267		)	(4,871		)
State taxes, net of federal benefit	154			(27		)	2,405
Restricted stock units tax shortfall	405			1,025			1,651
Taxes on foreign earnings at less than the U.S. statutory rate	14,427			13,095			(22,464		)
Effect of tax rate change	—			(2,929		)	23,843
Effect of moving activity to higher tax rate jurisdiction	—			(14,620		)	—
Management fee charged to international operations	3,455			1,515			1,213
Tax effect of TRA derecognition	—			—			46,874
Establishment of valuation allowances	37,802			22,892			51,911
Goodwill impairment	25,677			—			—
Return-to-provision adjustments	(524		)	(521		)	3,551
Foreign tax credit	(5,707		)	—			—
Other	4,656			560			(906		)
Total income tax expense (benefit)	$	23,794		$	(2,950	)	$	72,918

A reconciliation using the Netherlands statutory rate was not provided as there are no significant operations in the Netherlands.

Deferred tax assets and liabilities are recorded for the anticipated future tax effects of temporary differences between the financial statement basis and tax basis of our assets and liabilities and are measured using the tax rates and laws expected to be in effect when the differences are projected to reverse. A valuation allowance is recorded when it is not more likely than not that some or all the benefit from the deferred tax asset will be realized.

Significant components of deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2019			2018
Deferred tax assets
Foreign net operating loss	$	17,121		$	13,290
U.S. net operating loss	104,105			76,349
Research and development credit	1,016			609
Foreign tax credit carryover	422			—
Intangibles	9,365			5,933
Inventory	2,280			2,350
Property and equipment	16,161			14,621
Investment in partnership	24,372			23,931
Other	1,442			773
Valuation allowance	(130,010		)	(84,972		)
Total deferred tax assets	46,274			52,884

Deferred tax liabilities
Investment in partnership	(23,728		)	(27,352		)
Property and equipment	(1,253		)	(3,652		)
Goodwill	(7,297		)	(7,259		)
Other	(329		)	(221		)
Total deferred liabilities	(32,607		)	(38,484		)

Net deferred tax assets (liabilities)	$	13,667		$	14,400

As of December 31, 2019, we have income tax net operating loss (“NOL”) carryforwards related to both our U.S. and foreign operations of approximately $443.6 million. In addition, we have research and development tax credit carryforwards of approximately $1.0 million. The ultimate utilization of the NOLs and research and development credits depend on the ability to generate sufficient taxable income in the appropriate tax jurisdiction. These tax attributes expire as follows (in thousands):



Year of Expiration	U.S. NOLs		Foreign NOLs		R&D Credits

2020 - 2024	$	—	$	11,598	$	—
2025 - 2029	—		8,084		—
2030 - 2038	196,550		—		1,016
Does not expire	174,623		52,746		—
	$	371,173	$	72,428	$	1,016

The valuation allowance on our NOLs increased from $85.0 million to $130.0 million during 2019 as a result of accumulated tax losses in both the U.S. and various foreign tax jurisdictions. We evaluated all available evidence and determined that it is more likely than not that these losses will not be realized.

It is our intention that all cash and earnings of our subsidiaries as of December 31, 2019 are permanently reinvested and will be used to meet operating cash flow needs. Existing plans do not demonstrate a need to repatriate foreign cash to fund parent company activity, however, should we determine that parent company funding is required, we estimate that any such cash needs may be met without adverse tax consequences.

As of December 31, 2019 and 2018, we had total gross uncertain tax positions of $0.3 million. Substantially all of the uncertain tax positions, if recognized in the future, would impact our effective tax rate. We have elected to classify interest and penalties incurred on income taxes as income tax expense.

We file income tax returns in the U.S. and various international tax jurisdictions. As of December 31, 2019, our U.S. tax returns remain open to examination for the tax years 2017 through 2018, and the major foreign taxing jurisdictions to which we are subject to tax are open to examination for the tax years 2010 through 2018.