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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7. Income Taxes Income before income taxes and the provision for income taxes consisted of the following:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
United States |  | $ | 42,219 |  |  | $ | 42,124 |  |  | $ | 16,035 |
International |  |  | 23,285 |  |  |  | 28,679 |  |  |  | 13,536 |
Total |  | $ | 65,504 |  |  | $ | 70,803 |  |  | $ | 29,571 |
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 6,198 |  |  | $ | 12,913 |  |  | $ | 4,761 |
State |  |  | 644 |  |  |  | 3,587 |  |  |  | 791 |
Foreign |  |  | 5,000 |  |  |  | 5,178 |  |  |  | (386 | )
|  |  | 11,842 |  |  |  | 21,678 |  |  |  | 5,166 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | 4,607 |  |  |  | (3,052 | ) |  |  | (574 | )
State |  |  | 595 |  |  |  | (6,408 | ) |  |  | 104 |
Foreign |  |  | (927 | ) |  |  | 292 |  |  |  | (916 | )
|  |  | 4,275 |  |  |  | (9,168 | ) |  |  | (1,386 | )
Total |  | $ | 16,117 |  |  | $ | 12,510 |  |  | $ | 3,780 |
Net deferred tax assets consisted of the following:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
|  | (In thousands) |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Accruals and allowances |  | $ | 25,737 |  |  | $ | 25,041 |
Net operating loss carryforwards |  |  | 1,010 |  |  |  | 1,352 |
Stock-based compensation |  |  | 4,032 |  |  |  | 5,374 |
Operating lease liability |  |  | 4,060 |  |  |  | 5,303 |
Deferred revenue |  |  | 1,212 |  |  |  | 641 |
Acquired intangibles |  |  | 29,857 |  |  |  | 33,860 |
Depreciation and amortization |  |  | 1,661 |  |  |  | 1,651 |
Other |  |  | 3,971 |  |  |  | 3,285 |
Total deferred tax assets |  |  | 71,540 |  |  |  | 76,507 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Right of use asset |  |  | (3,130 | ) |  |  | (4,264 | )
Other |  |  | (1,083 | ) |  |  | (987 | )
Total deferred tax liabilities |  |  | (4,213 | ) |  |  | (5,251 | )
Valuation Allowance(1) |  |  | (3,532 | ) |  |  | (2,933 | )
Net deferred tax assets |  | $ | 63,795 |  |  | $ | 68,323 |
(1) | Valuation allowance is presented gross. The valuation allowance net of the federal tax effect was $3.5 million and $2.9 million for the years ended December 31, 2021 and 2020, respectively.
Management’s judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and any valuation allowance recorded against its deferred tax assets. As of December 31, 2021, a valuation allowance of $3.5 million was placed against certain federal tax and state attributes since the recovery of the assets is uncertain. There was a valuation allowance of $2.9 million placed against deferred tax assets as of December 31, 2020. Accordingly, the valuation allowance increased $0.6 million during 2021. In management’s judgment it is more likely than not that the remaining deferred tax assets will be realized in the future as of December 31, 2021, and as such no valuation allowance has been recorded against the remaining deferred tax assets. The effective tax rate differed from the applicable U.S. statutory federal income tax rate as follows:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Tax at federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State, net of federal benefit |  |  | 1.4 | % |  |  | 2.9 | % |  |  | 2.4 | %
Impact of international operations |  |  | (1.8 | )% |  |  | (5.0 | )% |  |  | (0.8 | )%
Stock-based compensation |  |  | 2.9 | % |  |  | 5.4 | % |  |  | 10.7 | %
Tax credits |  |  | (1.9 | )% |  |  | (2.3 | )% |  |  | (5.9 | )%
Valuation allowance |  |  | 0.3 | % |  |  | 1.8 | % |  |  | 0.9 | %
State Valuation Allowance Release |  |  | — | % |  |  | (5.8 | )% |  |  | — | %
Base Erosion Anti-Abuse Tax |  |  | 3.7 | % |  |  | — | % |  |  | 7.2 | %
Transaction costs |  |  | (0.9 | )% |  |  | — | % |  |  | (2.5 | )%
Recognition of previously unrecognized tax benefits |  | 0.0% |  |  |  | 0.3 | % |  |  | (20.6 | )%
Others |  |  | (0.1 | )% |  |  | (0.6 | )% |  |  | 0.4 | %
Provision for income taxes |  |  | 24.6 | % |  |  | 17.7 | % |  |  | 12.8 | %
As a result of changes in fair value of available-for-sale securities and foreign currency hedging, income tax (provision) benefits of $(31,000), $8,000, and $(10,000) were recorded in comprehensive income related to the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, the Company has approximately $2.0 million of acquired federal net operating loss carryforwards. All the losses are subject to annual usage limitations under Internal Revenue Code Section 382. The federal losses expire in different years beginning in fiscal year 2022. The Company files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for years prior to 20 1 6. The Company is no longer subject to foreign income tax examinations before 2004. The Italian Tax Authority (ITA) has audited the Company’s 2004 through 2012 tax years. The Company is currently in litigation with the ITA with respect to these years. The Company is currently under exa mination by the Internal Revenue Service (“IRS”) for the year ended December 31, 2018. Additionally, the state of California commenced an examination of the 2016 through 2018 tax years. The Company has limited audit activity in various other states and foreign jurisdictions. Due to the uncertain nature of ongoing tax audits, the Company has recorded its liability for uncertain tax positions as part of its long-term liability as payments cannot be anticipated over the next 12 months. The existing tax positions of the Company continue to generate an increase in the liability for uncertain tax positions. The liability for uncertain tax positions may be reduced for liabilities that are settled with taxing authorities or on which the statute of limitations could expire without assessment from tax authorities. The possible reduction in liabilities for uncertain tax positions resulting from the expiration of statutes of limitation in multiple jurisdictions in the next 12 months is approximately $0.5 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows:
|  | Federal, State, and Foreign Tax |
|  | (In thousands) |
Balance as of December 31, 2018 |  | $ | 11,983 |
Additions based on tax positions related to the current year |  |  | 385 |
Additions for tax positions of prior years |  |  | 996 |
Settlements |  |  | (705 | )
Reductions for tax positions of prior years |  |  | (3,440 | )
Reductions due to lapse of applicable statutes |  |  | (609 | )
Adjustments due to foreign exchange rate movement |  |  | 459 |
Balance as of December 31, 2019 |  |  | 9,069 |
Additions based on tax positions related to the current year |  |  | 442 |
Additions for tax positions of prior years |  |  | 253 |
Reductions due to lapse of applicable statutes |  |  | (744 | )
Adjustments due to foreign exchange rate movement |  |  | 522 |
Balance as of December 31, 2020 |  |  | 9,542 |
Additions based on tax positions related to the current year |  |  | 463 |
Additions for tax positions of prior years |  |  | 50 |
Reductions due to lapse of applicable statutes |  |  | (556 | )
Adjustments due to foreign exchange rate movement |  |  | (295 | )
Balance as of December 31, 2021 |  | $ | 9,204 |
The total amount of net UTB that, if recognized would affect the effective tax rate as of December 31, 2021 is $7.3 million. The ending net UTB results from adjusting the gross balance at December 31, 2021 for items such as U.S. federal and state deferred tax, interest, and deductible taxes. The net UTB is included as a component of non-current income taxes payable within the consolidated balance sheets. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2021, 2020, and 2019, total interest and penalties expensed were $0.2 million, $0.2 million, and $(1.4) million, respectively. As of December 31, 2021 and 2020, accrued interest and penalties on a gross basis was $2.4 million, and $2.3 million, respectively. Included in accrued interest are amounts related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company has not provided deferred taxes on earnings of $7.4 million of undistributed earnings of foreign subsidiaries that are indefinitely reinvested outside of the U.S. The Company estimates that if these earnings were repatriated to the U.S., it would result in approximately $1.6 million in associated tax without consideration of foreign tax credits. Determination of foreign tax credit limitations depends on several factors which cannot be estimated.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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