XML 129 R16.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 9 — Income Taxes U.S. Tax Reform The Tax Cuts and Jobs Act (“Tax Act”) was enacted on December 22, 2017. The Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21% beginning in 2018, required companies to pay a one-time transition tax on all offshore earnings that were previously tax deferred and created new taxes on certain foreign sourced earnings. In March 2018, the FASB issued ASU 2018-05, “Income Taxes – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The guidance provided for a provisional one-year measurement period for entities to finalize their accounting for certain tax effects related to the Tax Act. As of December 31, 2017, the Company made a provisional estimate of $20,153 for the effects on our existing deferred tax balances, the one-time transition tax and our indefinite reinvestment assertion regarding foreign subsidiary earnings in accordance with the guidance. As of December 31, 2018, the Company evaluated the provisional amounts initially recorded for the year ended December 31, 2017 and recorded adjustments based on updates to the Company’s assumptions and the application of additional interpretative guidance as issued during 2018. The adjustments are primarily a result of refining the net deferred tax asset position with the completion of our 2017 U.S. income tax return and changing tax accounting methods that affected the timing of certain US tax deductions. These adjustments resulted in (i) a decrease in our existing deferred tax asset balances which resulted in an income tax expense of $4,950 and (ii) a net increase to the one-time transition tax which resulted in an income tax expense of $24,625. No adjustment was required to the $9,578 tax benefit included in the provision for income taxes as of December 31, 2017 to offset the one-time transition tax related to the previous deferred tax liability that existed for the undistributed foreign earnings that were not permanently reinvested. As of December 31, 2018, the total income tax expense was $19,997 for the year ended December 31, 2017, as compared to the provisional estimate of $20,153. The Company also analyzed the impact of several new provisions of the Tax Act that became effective as of January 1, 2018, such as global intangible low-taxed income (“GILTI”) provision, foreign-derived intangible income (“FDII”) deduction, a new minimum tax related to payment to foreign subsidiaries and affiliates known as base erosion anti-abuse tax (“BEAT”), interest expense limitations under Internal Revenue Code (“IRC”) section 163(j), executive compensation limitations under IRC section 162(m) and various other provisions. The GILTI provision imposes a tax on certain earnings of foreign subsidiaries. U.S. GAAP allows companies to make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred. We have elected to account for GILTI in the year the tax is incurred. The deferred tax assets and deferred tax liabilities and related valuation allowance were comprised of the following:
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 17,881 |  |  | $ | 7,666 |
Intangible assets |  |  | 33,609 |  |  |  | 42,853 |
Research and development credits |  |  | 9,752 |  |  |  | 8,211 |
Depreciation |  |  | 7,223 |  |  |  | 6,321 |
Valuation reserves and accrued liabilities |  |  | 7,196 |  |  |  | 4,849 |
Foreign tax credit |  |  | 262 |  |  |  | 376 |
Stock compensation |  |  | 3,485 |  |  |  | 4,128 |
Inventory |  |  | 1,284 |  |  |  | 1,069 |
Patents |  |  | 134 |  |  |  | 150 |
Defined benefit obligation |  |  | 2,027 |  |  |  | 1,796 |
Other credits |  |  | 11,491 |  |  |  | 3,701 |
Other |  | $ | 114 |  |  |  | 89 |
Total deferred tax asset |  |  | 94,458 |  |  |  | 81,209 |
Valuation allowance |  |  | (28,763 | ) |  |  | (9,977 | )
Deferred tax liabilities: |  |  |  |  |  |  |  |
Unrealized foreign currency exchange gains |  |  | (674 | ) |  |  | (554 | )
Undistributed profits of subsidiary |  |  | (4,629 | ) |  |  | (4,352 | )
Property and equipment |  |  | (3,366 | ) |  |  | (2,896 | )
Other |  |  | (733 | ) |  |  | (583 | )
Total deferred tax liability |  |  | (9,402 | ) |  |  | (8,385 | )
Net deferred tax asset |  | $ | 56,293 |  |  | $ | 62,847 |
Reconciliations between the statutory Federal income tax rate and the effective rate of income tax expense for each of the three years in the period ended December 31, 2019 are as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Statutory Federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 34.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Change in Valuation Allowance |  |  | 30.7 | % |  |  | (6.6 | )% |  |  | 10.6 | %
Effect of different tax rates of foreign jurisdictions |  |  | (24.8 | )% |  |  | (6.6 | )% |  |  | (20.8 | )%
US Tax Reform Items |  |  | 4.3 | % |  |  | 10.8 | % |  |  | 29.1 | %
Research and Development Credits |  |  | (2.3 | )% |  |  | (2.5 | )% |  |  | (4.6 | )%
Non-deductible expenses |  |  | 2.1 | % |  |  | 3.4 | % |  |  | 2.4 | %
Foreign, state and local tax, net of Federal benefit |  |  | 1.7 | % |  |  | 1.8 | % |  |  | 0.8 | %
Tax effects of intercompany transfers |  |  | 1.5 | % |  |  | 0.8 | % |  |  | (5.0 | )%
Undistributed profit of subsidiaries |  |  | 1.2 | % |  |  | 1.2 | % |  |  | 5.8 | %
Other |  |  | 1.2 | % |  |  | 4.6 | % |  |  | (1.0 | )%
Stock Compensation Expense |  |  | 0.0 | % |  |  | 0.0 | % |  |  | (2.2 | )%
Effective Rate |  |  | 36.6 | % |  |  | 27.9 | % |  |  | 49.1 | %
The Company has Net Operating Loss (“NOL”) carryforwards as follows:
Jurisdiction |  | Amount as of December 31, 2019 |  |  | Years of Expiration
U.S. Federal and state income tax |  | $ | 85,828 |  |  | 2020-2039
Foreign |  | $ | 13,153 |  |  | 2020-2024
Foreign |  | $ | 109,665 |  |  | Never
A portion of the U.S. Federal NOLs was incurred prior to the June 8, 1999 Preferred Financing, which qualified as a change in ownership under Section 382 of the Internal Revenue Code (“IRC”). Due to this change in ownership, the NOL accumulated prior to the change in control can only be utilized against current earnings up to a maximum annual limitation of approximately $591. As a result of the annual limitation, approximately $19,349 in NOLs generated prior to the change in control have already expired without being utilized. No further NOL is available to be utilized in future periods. We have incurred NOLs in various states associated with the benefits of the state dividends received reduction along with the foreign royalty exclusion. The state net operating loss carryforwards expire at various dates from 2020 to 2039. Management has concluded that it is more likely than not that a majority of these NOLs will not be utilized, and thus has not recognized the benefit of these NOLs. At December 31, 2019, certain non-U.S. subsidiaries have net operating loss carryforwards totaling $122,818. This amount includes $13,153 in NOLs that expire at various dates from 2020 through 2024 and the remaining $109,665 have no expiration date. The Company has a valuation allowance recorded against $110,012 of the total non-U.S. subsidiaries’ net operating loss carryforwards as of December 31, 2019. The earnings before income taxes and our tax provision are comprised of the following:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 74,531 |  |  | $ | 10,092 |  |  | $ | 1,258 |
Foreign |  |  | (15,380 | ) |  |  | 48,027 |  |  |  | 67,997 |
Total income before income taxes |  | $ | 59,151 |  |  | $ | 58,119 |  |  | $ | 69,255 |
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 262 |  |  | $ | 340 |  |  | $ | 4,140 |
State and local |  |  | 94 |  |  |  | (71 | ) |  |  | 150 |
Foreign |  |  | 17,672 |  |  |  | 9,224 |  |  |  | 24,672 |
Total current income tax expense |  |  | 18,028 |  |  |  | 9,493 |  |  |  | 28,962 |
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,490 | ) |  |  | (1,422 | ) |  |  | 15,207 |
State and local |  |  | (1 | ) |  |  | 20 |  |  |  | 2,308 |
Foreign |  |  | 6,108 |  |  |  | 8,129 |  |  |  | (12,449 | )
Total deferred income tax expense |  |  | 3,617 |  |  |  | 6,727 |  |  |  | 5,066 |
Total tax expense |  | $ | 21,645 |  |  | $ | 16,220 |  |  | $ | 34,028 |
As of December 31, 2019, deferred income taxes have not been provided on the undistributed earnings of the Company’s foreign subsidiaries since these earnings will not be taxable upon repatriation to the United States. These earnings will be primarily treated as previously taxed income from either the one-time transition tax or GILTI, or they will be offset with a 100% dividend received deduction. However, the Company continues to provide a deferred tax liability for foreign withholding tax that will be incurred with respect to the undistributed foreign earnings that are not permanently reinvested. The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2019, the Company is no longer subject to U.S. Federal examinations by tax authorities for tax years before 2015 and is no longer subject to foreign examinations by tax authorities for tax years before 2012. During 2015, to entice the Company to construct a new facility in Macedonia, the government of Macedonia granted the Company a tax holiday that released the Company from the obligation to pay corporate income taxes for a ten year period, subject to certain limitations. The amount of corporate income tax savings realized by the Company as a result of this tax holiday during 2019 and 2018, respectively, was zero as a result of operating losses generated during previous periods. The aggregate dollar effect and per share effect of the corporate income tax holiday during 2019 and 2018 was, therefore, immaterial. At December 31, 2019, 2018 and 2017, the Company had total unrecognized tax benefits of $3,795, $2,819 and $3,812, respectively, all of which, if recognized, would affect the effective income tax rates. The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of year |  | $ | 2,819 |  |  | $ | 3,812 |  |  | $ | 3,877 |
Additions based on tax position related to current year |  |  | 661 |  |  |  | 221 |  |  |  | 1,758 |
Additions based on tax position related to prior year |  |  | 352 |  |  |  | 423 |  |  |  | (105 | )
Reductions from settlements and statute of limitation expiration |  |  | — |  |  |  | (1,469 | ) |  |  | (2,247 | )
Effect of foreign currency translation |  |  | (37 | ) |  |  | (168 | ) |  |  | 529 |
Balance at end of year |  | $ | 3,795 |  |  | $ | 2,819 |  |  | $ | 3,812 |
The Company classifies income tax-related penalties and net interest as income tax expense. In the years ended December 31, 2019, 2018 and 2017 income tax related interest and penalties were insignificant. It is reasonably possible that audit settlements, the conclusions of current examinations or the expiration of the statute of limitations in several jurisdictions could impact the Company’s unrecognized tax benefits. If recognized, all of the Company’s gross unrecognized tax benefits would affect the Company’s effective tax rate.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration