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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes [Abstract] |
Income Taxes |
Note 9—Income Taxes
Income tax expense (benefit) based on income before income taxes consisted of the following:
|  |  | Year Ended December 31,
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014
| Current: |  |  |  |  |  |  |  |
|  | U.S. Federal | $ | (1,033) |  | $ | 619 |  | $ | (87)
|  | State and local |  | 498 |  |  | 798 |  |  | 822
|  | Foreign |  | (2,379) |  |  | 6,002 |  |  | 4,626
|  |  |  | (2,914) |  |  | 7,419 |  |  | 5,361
| Deferred: |  |  |  |  |  |  |  |
|  | U.S. Federal |  | 3,926 |  |  | (12,322) |  |  | 8,999
|  | State and local |  | 1,196 |  |  | 1,194 |  |  | 1,663
|  | Foreign |  | 1,933 |  |  | (1,653) |  |  | 1,365
|  |  |  | 7,055 |  |  | (12,781) |  |  | 12,027
|  |  | $ | 4,141 |  | $ | (5,362) |  | $ | 17,388
Worldwide income before income taxes consisted of the following:
|  |  | Year Ended December 31,
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014
| United States | $ | 6,520 |  | $ | 18,599 |  | $ | 24,260
| Foreign |  | 61,668 |  |  | 71,440 |  |  | 74,369
|  | $ | 68,188 |  | $ | 90,039 |  | $ | 98,629
Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income taxes as a result of the following:
|  |  |  | Year Ended December 31,
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014
| Tax at statutory rate | $ | 23,866 |  | $ | 31,514 |  | $ | 34,520
| State taxes, net of federal tax effect |  | 1,102 |  |  | 1,295 |  |  | 1,615
| Effect of foreign operations and tax incentives |  | (15,496) |  |  | (21,820) |  |  | (24,330)
| Change in valuation allowance |  | (1,152) |  |  | (19,640) |  |  | (118)
| Chinese retroactive tax incentive |  | — |  |  | — |  |  | (1,227)
| Losses in foreign jurisdictions for which no benefit has |  |  |  |  |  |  |  |
|  | been provided |  | 2,106 |  |  | 3,711 |  |  | 5,812
| Change in uncertain tax benefits reserve |  | (8,270) |  |  | (1,653) |  |  | —
| Other |  | 1,985 |  |  | 1,231 |  |  | 1,116
| Total income tax expense | $ | 4,141 |  | $ | (5,362) |  | $ | 17,388
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
|  |  |  | December 31,
(in thousands) |  | 2016 |  |  | 2015
| Deferred tax assets: |  |  |  |  |
| Carrying value of inventories | $ | 2,400 |  | $ | 4,391
| Accrued liabilities and allowances deductible for tax purposes on a cash basis |  | 5,663 |  |  | 6,052
| Goodwill |  | 4,814 |  |  | 8,035
| Stock-based compensation |  | 3,856 |  |  | 6,723
| Net operating loss carryforwards |  | 38,988 |  |  | 35,879
| Tax credit carryforwards |  | 8,688 |  |  | 8,121
| Other |  | 6,812 |  |  | 9,009
|  |  |  | 71,221 |  |  | 78,210
| Less: valuation allowance |  | (16,026) |  |  | (17,202)
| Net deferred tax assets |  | 55,195 |  |  | 61,008
| Deferred tax liabilities: |  |  |  |  |
| Plant and equipment, due to differences in depreciation |  | (11,499) |  |  | (6,138)
| Intangible assets, due to differences in amortization |  | (35,492) |  |  | (39,060)
| Other |  | (1,632) |  |  | (1,722)
| Gross deferred tax liability |  | (48,623) |  |  | (46,920)
| Net deferred tax asset | $ | 6,572 |  | $ | 14,088
All deferred taxes are classified as non-current on the balan ce sheet as of December 31, 2016 and 2015. All deferred tax assets and liabilities are offset and presented as a single net noncurrent amount by each tax jurisdiction. The Company has a net deferred tax asset in all tax jurisdictions. The net change in the total valuation allowance for 2016, 2015 and 2014 was an increase (decrease) of $(1.2) million, $(19.5) million and $6.4 million, respectively. In assessing the realizability of 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 in come during the periods in which those 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. Based upon the l evel of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances as of De cember 31, 2016. During 2015, the Company evaluated the recoverability of its deferred tax assets using the criteria described above and concluded that the Company’s projected future taxable income in the U.S. is sufficient to utilize additional net operating loss carryforwards and other deferred tax a ssets. As a result, during 2015, the Company reduced its valuation allowance by $19.6 million. As of December 31, 2016, the Company had $57.1 mill ion in U.S. Federal operating loss carryforwards which will expire from 202 4 to 203 6; state operating loss carryforwards of approximately $77.0 million which will expire from 2017 to 2031; foreign operating loss carryforwards of approximately $24.6 million with indefinite carryforward periods; and foreign operating loss carryforwards of approximately $34.7 million which will expire at varying dates through 202 6. The utilization of these net operating loss carryforwards is limited to the future operations of the Company in the tax jurisdictions in which such carryforwards arose. The Company has U.S. federal tax credit carryforwards of $6.7 million, which will expire at varying dates through 203 6. The Company has state tax credit carryforwards of $2.0 million which will expire at varying dates through 20 36. Cumulative undistributed earnings of certain foreign subsidiaries amounted to approximately $846 million as of December 31, 2016. The Company considers earnings from foreign subsidiaries to be indefinite ly reinvested and, accordingly, no provision for U.S. federal and state income taxes has been made for these earnings. Upon distribution of foreign subsidiary earnings in the form of dividends or otherwise, such distributed earnings would be subject to U.S. income taxes and foreign withholding taxes, reduced by any applicable foreign tax credits. Determination of the amount of any unrecognized deferred tax liability on these undistributed earnings is not practicable. The Company has been granted certain ta x incentives, including tax holidays, for its subsidiaries in China, Malaysia and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through 201 8 in China, 20 21 in Malaysia and 20 28 in Thailand, and are subject to certa in conditions with which the Company expects to comply. The net impact of these tax incentives was to lower income tax expense for 2016, 2015, and 2014 by approximately $6.7 million (approximately $0.13 per di luted share), $13.7 million (approximately $0.2 6 per d iluted share) and $12.7 million (approximately $0.23 per diluted share), respectively, as follows:
|  |  | Year Ended December 31,
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014
| China | $ | 1,302 |  | $ | 5,347 |  | $ | 2,800
| Malaysia |  | 2,346 |  |  | 2,075 |  |  | 2,299
| Thailand |  | 3,068 |  |  | 6,271 |  |  | 7,622
|  | $ | 6,716 |  | $ | 13,693 |  | $ | 12,721
The Company must determine whether it is “more-likely-than-not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. As of December 31, 2016, the total amount of the reserve for uncertain tax benefits in cluding interest and penalties wa s $7.9 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
|  |  |  | December 31,
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014
| Balance as of January 1 | $ | 13,114 |  | $ | 14,756 |  | $ | 18,174
| Additions related to current year tax positions |  | — |  |  | — |  |  | 968
| Decreases as a result of a lapse of applicable statute of |  |  |  |  |  |  |  |
|  | limitations in current year |  | (5,079) |  |  | (1,653) |  |  | —
| Additions related to prior year tax positions |  | 89 |  |  | 800 |  |  | —
| Decreases related to prior year tax positions |  | (333) |  |  | (789) |  |  | (4,386)
| Balance as of December 31 | $ | 7,791 |  | $ | 13,114 |  | $ | 14,756
During 2016, the Company reduced its unrecognized tax benefits reserve by approximately $8.3 million (including interest and penalties) relating to the expiration of the statute of limitations for a foreign subsidiary that was liquidated in 2011 and closed its operations in 2005. The decrease in the reserve during 2015 of $1.7 million wa s the result of the expiration of the statute of limitations for a dormant foreign subsidiary in Thailand. The decrease in the total amount of unrecognized tax benefits reserve during 2014 was primarily the result of the disposal of the Tianjin, China subsidiary. The reserve is classified as a curre nt or long-term liability in the consolidated balance sheet based on the Company’s expectation of when the items will be settled. The Company records interest expense and penalties accrued in relation to uncertain income tax benefits as a component of curr ent income tax expense. The amount of accrued potential interest on unrecognized tax benefits included in the reserve as of December 31, 2016 is $0.1 million. There was no reserve for potential penalties. The decrease in the reserve relating to interest and penalties on unrecognized tax benefits from $3.3 million in 2015 to $0.1 million in 2016 results from the corresponding reduction for the Thailand subsidiary discussed above. The total amount of interest and penalti es included in income tax expense was $0.1 million during both 2015 and 2014. The Company did not incur any interest and penalties in 2016. The Company and its subsidiaries in Brazil, China, Ireland, Luxembourg, Malaysia, Mexico, the Netherlands, Romania, Singapore, Thailand and the United States remain open to examination by the various local taxing authorities, in total or in part, for fiscal y ears 2011 to 2016. A subsidiary in Thailand remains open to examination for fiscal years 2004 to 20 05 for a tax audit that is still outstanding. The Company is subject to examination by tax authorities for varying periods in various U.S. and foreign tax jurisdictions. Currently, the Company does not have any ongoing Internal Revenue Service income tax audits. During the course of such examinations, disputes may occur as to matters of fact or law. Also, in most tax jurisdictions, the passage of time without examination will result in the expiration of applicable statutes of limitations thereby precluding examination of the tax period(s) for which such statute of limitation has expired. The Company believes that it has adequately provided for its tax liabilities.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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