XML 32 R16.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [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) |  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 1,406 |  |  | $ | (1,697 | ) |  | $ | (14,831 | )
State and local |  |  | 24 |  |  |  | (3,567 | ) |  |  | 10,110 |
Foreign |  |  | 9,120 |  |  |  | 11,474 |  |  |  | 29,817 |
|  |  | 10,550 |  |  |  | 6,210 |  |  |  | 25,096 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (3,784 | ) |  |  | 1,815 |  |  |  | (249 | )
State and local |  |  | (1,021 | ) |  |  | 1,409 |  |  |  | (550 | )
Foreign |  |  | (2,507 | ) |  |  | (5,590 | ) |  |  | 8,427 |
|  |  | (7,312 | ) |  |  | (2,366 | ) |  |  | 7,628 |
|  | $ | 3,238 |  |  | $ | 3,844 |  |  | $ | 32,724 |
Worldwide income (loss) before income taxes consisted of the following:
|  | Year Ended December 31, |
(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
United States |  | $ | (33,790 | ) |  | $ | (13,756 | ) |  | $ | (23,645 | )
Foreign |  |  | 51,083 |  |  |  | 41,025 |  |  |  | 79,186 |
|  | $ | 17,293 |  |  | $ | 27,269 |  |  | $ | 55,541 |
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) |  | 2020 |  |  | 2019 |  |  | 2018 |
Tax at statutory rate |  | $ | 3,632 |  |  | $ | 5,727 |  |  | $ | 11,664 |
State taxes, net of federal tax effect |  |  | (788 | ) |  |  | (1,705 | ) |  |  | 7,553 |
Effect of foreign operations and tax incentives |  |  | (6,372 | ) |  |  | (5,870 | ) |  |  | (11,945 | )
Change in valuation allowance |  |  | (3,029 | ) |  |  | (2,283 | ) |  |  | 2,114 |
Stock-based compensation |  |  | 347 |  |  |  | 118 |  |  |  | (143 | )
Provisional impact of U.S. Tax Reform |  |  | — |  |  |  | — |  |  |  | (4,353 | )
Impact of cash repatriation |  |  | — |  |  |  | — |  |  |  | 21,612 |
GILTI |  |  | 1,667 |  |  |  | 955 |  |  |  | 3,206 |
Losses in foreign jurisdictions for which no benefit has been provided |  |  | 5,798 |  |  |  | 4,379 |  |  |  | 1,423 |
Change in uncertain tax benefits reserve |  |  | (31 | ) |  |  | 200 |  |  |  | (317 | )
Other |  |  | 2,014 |  |  |  | 2,323 |  |  |  | 1,910 |
Total income tax expense |  | $ | 3,238 |  |  | $ | 3,844 |  |  | $ | 32,724 |
The U.S. Tax Cuts and Jobs Act (U.S. Tax Reform), which was signed into law on December 22, 2017, significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system, adding a global intangible taxation regime and imposing a transition (Transition Tax) tax on deemed repatriated cumulative earnings of foreign subsidiaries. The U.S. Tax Reform reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Company recorded the effects of the changes in the tax rate in the Company’s deferred tax assets and liabilities as of December 31, 2017. To minimize tax base erosion with a territorial tax system, the U.S. Tax Reform enacted a new global intangible low-taxed income (GILTI) provision that requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiaries tangible assets. The taxable earnings can be offset by a limited deemed paid foreign tax credit with no carrybacks or carryforwards available. The Company is subject to the GILTI provisions. The Company elected to account for the GILTI as a period cost and include the effect in the period in which it is incurred and not include it as a factor in the determination of deferred taxes. On December 22, 2017, additional guidance was issued on accounting for the tax effects of the U.S. Tax Reform (Staff Accounting Bulletin No. 118 (SAB 118)). SAB 118 provided a measurement period that should not extend beyond one year from the U.S. Tax Reform enactment date for companies to complete their accounting. The Company recorded a provisional tax expense of $101.6 million for the Transition Tax, and recognized a provisional deferred tax benefit of $3.9 million for a total net expense of $97.7 million as of December 31, 2017. As of December 31, 2018, the Company completed the accounting for the tax effects of U.S. Tax Reform within the period required from the enactment date. The Company recognized during the fourth quarter of 2018 after filing its U.S. income tax return, a discrete tax benefit adjustment of $6.4 million for the Transition Tax, and recorded a discrete tax expense adjustment of $2.0 million for the finalization of the deferred tax assets and liabilities for a net total adjustment of $4.4 million. These adjustments were based on additional analysis of undistributed cumulative foreign earnings, cumulative foreign taxes, changes in interpretations, and additional regulatory guidance that was issued during 2018 by the Internal Revenue Service (IRS). As a result of the completed accounting for the Transition Tax, the Company determined that its total Transition Tax liability as of December 31, 2020 is currently $51.9 million after reduction for U.S. tax carryforward losses, U.S. tax credit carryforwards, and foreign tax credit carrybacks that are allowed to be utilized against the total liability. The Company intends to pay this liability over the remaining five year payment period as prescribed by the U.S. Tax Reform and regulatory guidance issued by the IRS. $45.5 million of the Transition Tax liability is included in other long term liabilities. During 2020 and 2019, the Company repatriated $25.0 million and $52.1 million, respectively, of foreign earnings to the U.S. As of December 31, 2020, the Company has approximately $333.6 million in cumulative undistributed foreign earnings of its foreign subsidiaries. These earnings would not be subject to U.S. federal income tax, if distributed to the Company. The Company changed its assertion during 2018 on its foreign subsidiaries earnings that are permanently reinvested. A certain amount of earnings from specific foreign subsidiaries are permanently reinvested, and certain foreign earnings from other specific foreign subsidiaries is considered to be non-permanently reinvested and is available for immediate distribution to the Company. Income taxes have been accrued on the non-permanently reinvested foreign earnings including the 2017 Transition Tax, the U.S. tax on GILTI, and any applicable foreign or local withholding taxes. The Company estimates that it has approximately $3.7 million of unrecognized deferred tax liability related to any remaining undistributed permanently reinvested foreign earnings that have not already been subject to the 2017 Transition Tax, the U.S. tax on GILTI, and any applicable foreign income tax or local withholding taxes on cash distributions. As a result of this change in assertion during 2018, in relation to undistributed earnings prior to December 31, 2017, the Company recorded a net tax expense of $21.6 million consisting of tax expense of $30.8 million relating to foreign withholding tax from Asia and a net benefit of $9.2 million for U.S. foreign tax credits to offset the foreign taxes paid during 2018. In addition, the Company recorded applicable U.S. state income tax expense net of federal benefits related to the cash repatriation. Also during 2018, the Company incurred a net $4.4 million benefit associated with finalizing the provisional impact of the U.S. Tax Reform described above as required by SAB 118, and incurred a $3.2 million tax expense as a result of GILTI. 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) |  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Carrying value of inventories |  | $ | 3,470 |  |  | $ | 3,212 |
Accrued liabilities and allowances deductible for tax purposes on a cash basis |  |  | 13,086 |  |  |  | 8,945 |
Goodwill |  |  | 1,704 |  |  |  | 1,976 |
Stock-based compensation |  |  | 2,559 |  |  |  | 2,500 |
Operating right-of-use lease liabilities |  |  | 20,003 |  |  |  | 19,087 |
Net operating loss carryforwards |  |  | 19,120 |  |  |  | 19,493 |
Tax credit carryforwards |  |  | 3,368 |  |  |  | 2,421 |
Interest rate swap liabilities |  |  | 2,263 |  |  |  | 1,210 |
Other |  |  | 5,025 |  |  |  | 3,938 |
|  |  | 70,598 |  |  |  | 62,782 |
Less: valuation allowance |  |  | (19,038 | ) |  |  | (15,992 | )
Net deferred tax assets |  |  | 51,560 |  |  |  | 46,790 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Plant and equipment, due to differences in depreciation |  |  | (7,899 | ) |  |  | (10,428 | )
Operating right-of-use lease assets |  |  | (19,742 | ) |  |  | (18,826 | )
Intangible assets, due to differences in amortization |  |  | (14,078 | ) |  |  | (16,302 | )
Foreign withholding tax |  |  | (6,102 | ) |  |  | (7,181 | )
Other |  |  | (3,603 | ) |  |  | (2,283 | )
Gross deferred tax liability |  |  | (51,424 | ) |  |  | (55,020 | )
Net deferred tax liability |  | $ | 136 |  |  | $ | (8,230 | )
The net deferred tax liability is classified as follows: |  |  |  |  |  |  |  |
Long-term asset |  | $ | 4,924 |  |  | $ | 5,274 |
Long-term liability |  |  | (4,788 | ) |  |  | (13,504 | )
Total |  | $ | 136 |  |  | $ | (8,230 | )
All deferred taxes are classified as non-current on the balance sheet as of December 31, 2020 and 2019. All deferred tax assets and liabilities are offset and presented as a single net noncurrent amount by each tax jurisdiction. The net change in the total valuation allowance for 2020, 2019 and 2018 was a $3.0 million increase, a $2.3 million increase and a $2.1 million decrease, 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 income 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 level 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 December 31, 2020. As of December 31, 2020, the Company had $8.5 million in U.S. Federal operating loss carryforwards which will expire from 2027 to 2036; state operating loss carryforwards of approximately $44.5 million which will expire from 2021 to 2031; foreign operating loss carryforwards of approximately $13.0 million with indefinite carryforward periods; and foreign operating loss carryforwards of approximately $38.9 million which will expire at varying dates through 2030. 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 state tax credit carryforwards of $1.8 million which will expire at varying dates through 2026. The Company also has U.S. R&D tax credit carryforwards of $1.6 million which will expire from 2038 through 2040. The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Malaysia and Thailand that will expire at various dates, unless extended or otherwise renegotiated in 2021 in Malaysia and 2028 in Thailand, and are subject to certain conditions with which the Company expects to comply. The Company expects to obtain an extension of the Malaysia tax holiday in 2021 which will extend the tax holiday for another five years until 2026. The net impact of these tax incentives was to lower income tax expense for 2020, 2019, and 2018 by approximately $7.4 million (approximately $0.20 per diluted share), $5.0 million (approximately $0.13 per diluted share) and $7.9 million (approximately $0.17 per diluted share), respectively, as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
China |  | $ | — |  |  | $ | — |  |  | $ | 1,884 |
Malaysia |  |  | 4,945 |  |  |  | 3,010 |  |  |  | 3,287 |
Thailand |  |  | 2,496 |  |  |  | 2,025 |  |  |  | 2,715 |
|  | $ | 7,441 |  |  | $ | 5,035 |  |  | $ | 7,886 |
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, 2020, the total amount of the reserve for uncertain tax benefits including interest and penalties was $0.6 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
|  | December 31, |
(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Balance as of January 1 |  | $ | 513 |  |  | $ | 313 |  |  | $ | 708 |
Additions related to current year tax positions |  |  | — |  |  |  | — |  |  |  | 137 |
Additions related to prior year tax positions |  |  | — |  |  |  | 200 |  |  |  | — |
Decreases related to prior year tax positions |  |  | (14 | ) |  |  | — |  |  |  | (532 | )
Balance as of December 31 |  | $ | 499 |  |  | $ | 513 |  |  | $ | 313 |
During 2020, the Company released $14.0 thousand of uncertain tax benefits related to prior year tax positions. During 2019, the Company recorded $0.2 million of uncertain tax benefits related to prior year tax positions. During 2018, the Company released $0.5 million of uncertain tax benefits from an IRS audit. During the first quarter of 2018, the IRS indicated that this examination of years 2013 to 2015 was closed. In addition, the IRS also notified the Company during the first quarter 2018 that the examination of the Company’s consolidated U.S. income tax return filings for 2014 was also closed with no additional tax costs. The reserve is classified as a current or long-term liability in the consolidated balance sheets 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 current income tax expense. The amount of accrued potential interest on unrecognized tax benefits included in the reserve as of December 31, 2020 is $0.1 million. The reserve for potential penalties is $17.0 thousand. The Company did not record any interest and penalties during 2020 or 2019. The total amount of interest and penalties included in income tax expense was $0.1 million during 2018. The Company and its subsidiaries in Brazil, China, Ireland, Malaysia, Mexico, 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 years 2012 to 2020. Currently, the Company does not have any ongoing income tax examinations by any jurisdiction. During the course of such income tax 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.

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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration