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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 18 — Income Taxes

The income tax provisions were calculated based upon the following components of earnings before income tax for the years ended December 31, 2022, 2021 and 2020:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Earnings before income tax:

 

 

 

 

 

 

 

 

 

Domestic

 

$

(34,211

)

 

$

(4,547

)

 

$

(11,374

)

Foreign

 

 

72,593

 

 

 

118,399

 

 

 

92,930

 

Earnings before income tax

 

$

38,382

 

 

$

113,852

 

 

$

81,556

 

The components of the provision for income taxes for the years ended December 31, 2022, 2021 and 2020 are summarized as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Current income tax expense:

 

 

 

 

 

 

 

 

 

Federal

 

$

3,006

 

 

$

1,944

 

 

$

784

 

State and local

 

 

650

 

 

 

234

 

 

 

83

 

Foreign

 

 

17,607

 

 

 

18,390

 

 

 

20,150

 

Total current income tax expense

 

$

21,263

 

 

 

20,568

 

 

 

21,017

 

Deferred income tax (benefit) expense:

 

 

 

 

 

 

 

 

 

Federal

 

 

(5,971

)

 

 

(4,400

)

 

 

(2,302

)

State and local

 

 

(213

)

 

 

(91

)

 

 

32

 

Foreign

 

 

(1,138

)

 

 

4,341

 

 

 

3,119

 

Total deferred (benefit) income tax expense

 

 

(7,322

)

 

 

(150

)

 

 

849

 

Total income tax expense

 

$

13,941

 

 

$

20,418

 

 

$

21,866

 

As of December 31, 2022, deferred U.S. 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 global intangible low-taxed income (“GILTI”) provision, or they will be offset with a 100% dividend received deduction. However, the Company continues to provide a deferred tax liability for foreign income and withholding tax that will be incurred with respect to the undistributed foreign earnings that are not indefinitely reinvested.

The deferred tax assets and deferred tax liabilities and related valuation allowance were comprised of the following as of December 31, 2022 and 2021:

 

 

December 31,

 

 

 

2022

 

 

2021

 

Deferred tax assets:

 

 

 

 

 

 

Net operating losses

 

$

43,296

 

 

$

25,610

 

Intangible assets

 

 

4,417

 

 

 

21,179

 

Research and development credits

 

 

7,835

 

 

 

9,736

 

Property and equipment

 

 

6,983

 

 

 

7,071

 

Valuation reserves and accrued liabilities

 

 

8,388

 

 

 

7,333

 

Capitalized Research and Development Costs

 

 

19,087

 

 

 

9,018

 

Stock compensation

 

 

3,051

 

 

 

3,832

 

Defined benefit obligation

 

 

1,265

 

 

 

1,466

 

Inventory

 

 

6,762

 

 

 

1,914

 

Other credits

 

 

10,296

 

 

 

10,158

 

Other

 

 

790

 

 

 

146

 

Total deferred tax asset

 

 

112,170

 

 

 

97,463

 

Valuation allowance

 

 

(36,671

)

 

 

(16,090

)

Deferred tax liabilities:

 

 

 

 

 

 

Unrealized foreign currency exchange gains

 

$

(2,413

)

 

$

(2,488

)

Undistributed profits of subsidiary

 

 

(5,981

)

 

 

(6,676

)

Property and equipment

 

 

(15,423

)

 

 

(2,420

)

Other

 

 

(3,056

)

 

 

(1,428

)

Total deferred tax liability

 

 

(26,873

)

 

 

(13,012

)

Net deferred tax asset

 

$

48,626

 

 

$

68,361

 

Reconciliations between the statutory Federal income tax rate and the effective rate of income tax expense for the years ended December 31, 2022, 2021 and 2020 are as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Statutory Federal income tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

Change in valuation allowance

 

 

6.4

%

 

 

(1.2

)%

 

 

(0.4

)%

Effect of different tax rates of foreign jurisdictions

 

 

(4.9

)%

 

 

(5.2

)%

 

 

(4.7

)%

Tax credits & deductions related to R&D

 

 

(10.1

)%

 

 

(2.3

)%

 

 

(3.8

)%

Non-deductible expenses

 

 

14.9

%

 

 

1.7

%

 

 

2.1

%

Non-deductible expenses related to acquisitions

 

 

7.0

%

 

 

0.0

%

 

 

0.0

%

Other foreign, state and local taxes

 

 

0.7

%

 

 

1.6

%

 

 

1.4

%

Tax impact of foreign income

 

 

4.2

%

 

 

3.6

%

 

 

4.9

%

Stock option compensation

 

 

(3.8

)%

 

 

(2.0

)%

 

 

(0.4

)%

Other

 

 

0.9

%

 

 

0.7

%

 

 

6.7

%

Effective rate

 

 

36.3

%

 

 

17.9

%

 

 

26.8

%

The Company has Net Operating Loss (“NOL”) carryforwards as follows:

Jurisdiction

 

Amount as of December 31, 2022

 

 

Years of Expiration

U.S. state income tax

 

$

54,912

 

 

2023-2042

Foreign

 

$

320,417

 

 

Indefinite

We have NOL carryforwards in various states associated with the benefits of the state dividends received reduction and foreign royalty exclusion. The state NOL carryforwards generally expire at various dates from 2023 to 2042. We have concluded that there is

not sufficient evidence these NOL carryforwards will be utilized, and thus have not recognized the benefit of these NOL carryforwards.

At December 31, 2022, certain non-U.S. subsidiaries had NOL carryforwards totaling $320,417 which have no expiration date. The Company has a valuation allowance recorded against $133,877 of the total non-U.S. subsidiaries’ net operating loss carryforwards as of December 31, 2022.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2022, the Company was no longer subject to U.S. Federal examinations by tax authorities for tax years before 2019 and was no longer subject to foreign examinations by tax authorities for tax years before 2014.

The Company currently benefits from tax holidays in various non-U.S. jurisdictions with expiration dates from 2024 – 2025. The amount of corporate income tax savings realized by the Company as a result of the tax holidays during the current and prior years was immaterial as a result of operating losses previously generated.

At December 31, 2022, 2021 and 2020, the Company had total unrecognized tax benefits of $6,185, $5,665 and $4,967, 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,

 

 

 

2022

 

 

2021

 

 

2020

 

Balance at beginning of year

 

$

5,665

 

 

$

4,967

 

 

$

3,795

 

Additions based on tax position related to current year

 

 

972

 

 

 

1,105

 

 

 

1,489

 

Additions based on tax position related to prior year

 

 

433

 

 

 

160

 

 

 

179

 

Reductions from settlements and statute of limitation expiration

 

 

(610

)

 

 

(312

)

 

$

(650

)

Effect of foreign currency translation

 

 

(275

)

 

 

(255

)

 

 

154

 

Balance at end of year

 

$

6,185

 

 

$

5,665

 

 

$

4,967

 

The Company classifies income tax-related penalties and net interest as income tax expense. In the years ended December 31, 2022, 2021 and 2020, income tax related interest and penalties were not material. 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.