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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following is a geographical breakdown of income (loss) before the provision for income taxes:
| Year Ended December 31,
| 2018 |  | 2017 (1) |  | 2016 (1)
| (In thousands)
Domestic | $ | 46,528 |  |  | $ | 25,280 |  |  | $ | 16,395 |
Foreign | (10,912 | ) |  | (20,768 | ) |  | (3,419 | )
Income (loss) before provision for income taxes | $ | 35,616 |  |  | $ | 4,512 |  |  | $ | 12,976 |
___________________________________________
(1) | As adjusted for full retrospective adoption of ASC 606.
The provision for (benefit from) income taxes consisted of the following:
| Year Ended December 31,
| 2018 |  | 2017 (1) |  | 2016 (1)
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 1,404 |  |  | $ | 2,430 |  |  | $ | 6,724 |
State | 1,832 |  |  | 1,852 |  |  | 1,323 |
Foreign | 768 |  |  | 745 |  |  | 46 |
Total current income taxes | 4,004 |  |  | 5,027 |  |  | 8,093 |
Deferred: |  |  |  |  |
Federal | 5,455 |  |  | (19,822 | ) |  | 1,846 |
State | (909 | ) |  | (3,430 | ) |  | (1,255 | )
Foreign | (10,663 | ) |  | (7,781 | ) |  | (5,464 | )
Total deferred income taxes | (6,117 | ) |  | (31,033 | ) |  | (4,873 | )
Total provision for (benefit from) income taxes | $ | (2,113 | ) |  | $ | (26,006 | ) |  | $ | 3,220 |
___________________________________________
(1) | As adjusted for full retrospective adoption of ASC 606.
The provision for (benefit from) income taxes differs from the amount computed by applying the statutory federal tax rate as follows:
| Year Ended December 31,
| 2018 |  | 2017 (1) |  | 2016 (1)
| (In thousands)
U.S. federal tax provision at statutory rate | $ | 7,479 |  |  | $ | 1,579 |  |  | $ | 4,542 |
State taxes | 651 |  |  | 224 |  |  | 236 |
Non-deductible expenses | 1,424 |  |  | 1,373 |  |  | 1,212 |
Acquisition costs | — |  |  | — |  |  | 845 |
Share-based compensation expense | 414 |  |  | 39 |  |  | 1,941 |
Research tax credits | (3,230 | ) |  | (3,233 | ) |  | (2,075 | )
Domestic production deduction | — |  |  | (621 | ) |  | (890 | )
Restructuring impact | (4,205 | ) |  | — |  |  | — |
Foreign derived intangible income deduction | (349 | ) |  | — |  |  | — |
Tax audit settlement | — |  |  | — |  |  | (2,499 | )
Foreign rate differential | 561 |  |  | 938 |  |  | (154 | )
Stock option tax benefit | (4,419 | ) |  | (5,926 | ) |  | — |
One-time impact of the Tax Act | — |  |  | (20,005 | ) |  | — |
Other | (439 | ) |  | (374 | ) |  | 62 |
Total provision for (benefit from) income taxes | $ | (2,113 | ) |  | $ | (26,006 | ) |  | $ | 3,220 |
___________________________________________
(1) | As adjusted for full retrospective adoption of ASC 606.
Significant components of the Company’s deferred tax assets (liabilities) were as follows:
| December 31, 2018 |  | December 31, 2017 (1)
| (In thousands)
Deferred tax assets (liabilities): |  |  |
Deferred revenues | $ | 2,943 |  |  | $ | 127 |
Share-based compensation | 5,531 |  |  | 4,460 |
Inventory related items | 2,874 |  |  | 2,441 |
Tax credit carryforwards | 7,413 |  |  | 9,349 |
Reserves and accruals | 5,983 |  |  | 3,960 |
Loss carryforwards | 17,515 |  |  | 8,643 |
Other, net | 81 |  |  | 1,307 |
Gross deferred tax assets | 42,340 |  |  | 30,287 |
Valuation allowance | (1,256 | ) |  | — |
Total net deferred tax assets | 41,084 |  |  | 30,287 |
Intangibles | (32,304 | ) |  | (36,780 | )
Depreciation and amortization | (22,504 | ) |  | (14,338 | )
Prepaid expenses | (12,563 | ) |  | (11,161 | )
Total deferred tax liabilities | (67,371 | ) |  | (62,279 | )
Net deferred tax liabilities | $ | (26,287 | ) |  | $ | (31,992 | )
___________________________________________
(1) | As adjusted for full retrospective adoption of ASC 606.
Deferred income tax assets (liabilities) are provided for temporary differences that will result in future tax deductions or future taxable income, as well as the future benefit of tax credit carryforwards. The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. On the basis of this evaluation, as of December 31, 2018, $1.3 million of valuation allowances were recorded on certain foreign net operating losses carried forward, as the Company believes that such deferred tax assets are not more likely than not to be realized. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate from 35% to 21%, and as part of the transition to the new territorial tax system, the Tax Act imposes a one-time tax on a deemed repatriation of historical earnings of foreign subsidiaries. In addition, beginning as of January 1, 2018, the Tax Act created new taxes imposed on certain foreign earnings as part of the Global Intangible Low-Taxed Income, Base Erosion and Anti-Abuse Tax, and Foreign Derived Intangible Income. SEC Staff Accounting Bulletin No. 118 ("SAB 118") allowed the use of provisional amounts with reasonable estimates if the analysis of the impacts of the Tax Act have not been completed by when financial statements are issued for the year ended December 31, 2017. We reasonably estimated the effects of the Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. We recorded a provisional tax benefit of $20.0 million for the impact of the remeasurement of federal net deferred tax assets and liabilities from the permanent reduction in the U.S. statutory rate to 21% from 35% as adjusted for full retrospective adoption of ASC 606. As of December 31, 2018, computations related to the income tax effects of the Tax Act were finalized. As such, in accordance with SAB 118, the Company's accounting for effects of the Tax Act is complete. As of December 31, 2018, the Company has $3.8 million of federal net operating loss carryforwards expiring 2037, $3.0 million of state net operating loss carryforwards expiring at various dates beginning 2023, and $65.2 million of foreign net operating loss carryforwards expiring at various dates beginning 2024. U.S. federal net operating losses generated in 2018 have no expiration. For the year ended December 31, 2018, the Company did not generate net operating loss. For income tax purposes, the Company has federal and California research tax credits carryforwards of $3.1 million and $13.4 million, respectively. Federal research tax credit carryforwards from prior years will begin to expire in 2035. California credits are available indefinitely to reduce cash taxes otherwise payable. It is the Company's practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2018, the Company has not made a provision for U.S. federal income, withholding, and state income taxes on the outside basis difference related to certain foreign subsidiaries because earnings are intended to be indefinitely reinvested in operations outside the U.S. The Company files income tax returns in the United States and various states and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities, including major jurisdictions such as the United States, Germany, Italy, Netherlands, and the United Kingdom. With few exceptions, as of December 31, 2018, the Company is no longer subject to U.S., state, and foreign examination for years before 2015, 2014, and 2014, respectively. The aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the three years ended December 31, 2018 was as follows:
| (In thousands)
Year Ended December 31, 2015 | $ | 9,150 |
Increases related to tax positions taken during a prior period | 244 |
Decreases related to tax positions taken during the prior period | (1,980 | )
Increases related to tax positions taken during the current period | 6,724 |
Decreases related to settlements | (2,178 | )
Decreases related to expiration of statute of limitations | (344 | )
Year Ended December 31, 2016 | 11,616 |
Increases related to tax positions taken during a prior period | 503 |
Decreases related to tax positions taken during the prior period | (1,782 | )
Increases related to tax positions taken during the current period | 805 |
Decreases related to settlements | — |
Decreases related to expiration of statute of limitations | (401 | )
Year Ended December 31, 2017 | 10,741 |
Increases related to tax positions taken during a prior period | 19 |
Decreases related to tax positions taken during the prior period | (1,257 | )
Increases related to tax positions taken during the current period | 870 |
Decreases related to settlements | — |
Decreases related to expiration of statute of limitations | (412 | )
Year Ended December 31, 2018 | $ | 9,961 |
As of December 31, 2018, the total amount of gross unrecognized tax benefits, if realized, would decrease the Company’s tax expense by approximately $10.0 million. The Company recognizes interest and/or penalties related to uncertain tax positions in other income/expense in Consolidated Statements of Operations, accruing $0.5 million, $0.3 million, and $0.5 million for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively. Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. The combined amount of cumulative accrued interest and penalties was approximately $1.4 million, $1.4 million, and $1.1 million for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively. The Company does not believe there will be any significant changes in its unrecognized tax positions over the next twelve months.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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