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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2017
Income Taxes [Abstract] |
Consolidated Income Before Provision for Income Taxes | Consolidated income before provision for income taxes consists of the following for the years ended December 31, 2015, 2016 and 2017 (U.S. dollars in thousands):
|  | 2015 |  |  | 2016 |  |  | 2017 |
U.S. |  | $ | 134,473 |  |  | $ | (19,119 | ) |  | $ | 1,135 |
Foreign |  |  | 77,486 |  |  |  | 231,958 |  |  |  | 264,432 |
Total |  | $ | 211,959 |  |  | $ | 212,839 |  |  | $ | 265,567 |
Current and Deferred Taxes | The provision for current and deferred taxes for the years ended December 31, 2015, 2016 and 2017 consists of the following (U.S. dollars in thousands):
|  | 2015 |  |  | 2016 |  |  | 2017 |
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 6,328 |  |  | $ | ─ |  |  | $ | (14,358 | )
State |  |  | 1,483 |  |  |  | (718 | ) |  |  | 1,814 |
Foreign |  |  | 50,403 |  |  |  | 70,652 |  |  |  | 104,688 |
|  |  | 58,214 |  |  |  | 69,934 |  |  |  | 92,144 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 16,556 |  |  |  | (27,171 | ) |  |  | 45,593 |
State |  |  | (674 | ) |  |  | 1,104 |  |  |  | (2,273 | )
Foreign |  |  | 4,817 |  |  |  | 25,886 |  |  |  | 666 |
|  |  | 20,699 |  |  |  | (181 | ) |  |  | 43,986 |
Provision for income taxes |  | $ | 78,913 |  |  | $ | 69,753 |  |  | $ | 136,130 |
Deferred Tax Assets and Liabilities | The principal components of deferred taxes are as follows (U.S. dollars in thousands):
|  | Year Ended December 31, |
|  | 2016 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |
Inventory differences |  | $ | 2,521 |  |  | $ | 2,861 |
Foreign tax credit and other foreign benefits |  |  | 145,169 |  |  |  | 52,408 |
Stock-based compensation |  |  | 11,470 |  |  |  | 6,327 |
Accrued expenses not deductible until paid |  |  | 32,796 |  |  |  | 39,326 |
Foreign currency exchange |  |  | 4,826 |  |  |  | 2,001 |
Net operating losses |  |  | 9,584 |  |  |  | 5,230 |
Capitalized research and development |  |  | 358 |  |  |  | 197 |
Other |  |  | 1,063 |  |  |  | 211 |
Gross deferred tax assets |  |  | 207,787 |  |  |  | 108,561 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Foreign currency exchange |  |  | 105 |  |  |  | 874 |
Foreign withholding taxes |  | ─ |  |  |  | 29,018 |
Intangibles step-up |  |  | 12,107 |  |  |  | 6,568 |
Overhead allocation to inventory |  |  | 4,820 |  |  |  | 3,977 |
Amortization of intangibles |  |  | 19,091 |  |  |  | 11,475 |
Foreign outside basis in controlled foreign corporation |  |  | 106,846 |  |  | ─ |
Other |  |  | 20,572 |  |  |  | 2,676 |
Gross deferred tax liabilities |  |  | 163,541 |  |  |  | 54,588 |
Valuation allowance |  |  | (9,137 | ) |  |  | (56,906 | )
Deferred taxes, net |  | $ | 35,109 |  |  | $ | (2,933 | )
Deferred Tax Asset Valuation Adjustments | The deferred tax asset valuation adjustments for the years ended December 31, 2015, 2016 and 2017 are as follows (U.S. dollars in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2016 |  |  | 2017 |
Balance at the beginning of period |  | $ | 35,999 |  |  | $ | 49,271 |  |  | $ | 9,137 |
Additions charged to cost and expenses |  |  | 12,948 |  |  |  | 692 |  |  |  | 53,983 | (5)
Decreases |  |  | (2,943 | )(1) |  |  | (40,442 | )(4) |  |  | (6,400 | )(6)
Adjustments |  |  | 3,267 | (2) |  |  | (384 | )(2) |  |  | 186 | (2)
Balance at the end of the period |  | $ | 49,271 | (3) |  | $ | 9,137 |  |  | $ | 56,906 |
| (1) | Decreases in valuation allowance due to lapse in statute of limitation of the net operating losses carryforward which had no impact to the income statement.
| (2) | Represents the net currency effects of translating valuation allowances at current rates of exchange.
| (3) | The increase was due primarily to the deferred tax assets created by the unrealized loss in Venezuela for which the Company set up a full valuation allowance.
| (4) | Decrease in valuation allowance due to lapse in statute of limitation of the net operating losses carryforward and due to the write off of Venezuelan deferred tax assets, which had no impact to the income statement.
| (5) | Increase in valuation is due primarily to the $52.0 million that was recorded on the foreign tax credit carryforward. The additional amount is due to net operating losses in foreign markets.
| (6) | Decrease is due primarily to the write-off of Brazil deferred tax assets, which had no impact to the income statement, as a valuation allowance had been previously recorded against the asset.
Deferred Taxes, Net on a Jurisdiction Basis | The components of deferred taxes, net on a jurisdiction basis are as follows (U.S. dollars in thousands):
|  | Year Ended December 31, |
|  | 2016 |  |  | 2017 |
Net noncurrent deferred tax assets |  | $ | 35,752 |  |  | $ | 33,785 |
Net noncurrent deferred tax liabilities |  |  | 643 |  |  |  | 36,718 |
Deferred taxes, net |  | $ | 35,109 |  |  | $ | (2,933 | )
Reconciliation of Statutory to Effective Tax Rate | The actual tax rate for the years ended December 31, 2015, 2016 and 2017 compared to the statutory U.S. Federal tax rate is as follows:
|  | Year Ended December 31, |
|  | 2015 |  |  | 2016 |  |  | 2017 |
Income taxes at statutory rate |  |  | 35.00 | % |  |  | 35.00 | % |  |  | 35.00 | %
Indefinite reinvestment |  |  | .92 |  |  |  | (1.98 | ) |  |  | 2.75 |
Excess tax benefit from equity award |  | ─ |  |  | ─ |  |  |  | (2.38 | )
Non-deductible expenses |  |  | 0.09 |  |  |  | 0.11 |  |  |  | 0.17 |
Controlled foreign corporation losses |  |  | 1.09 |  |  |  | (2.63 | ) |  |  | (0.13 | )
Valuation allowance recognized foreign tax credit |  | ─ |  |  | ─ |  |  |  | 19.59 |
Write-off outside basis DTL |  | ─ |  |  | ─ |  |  |  | (2.89 | )
Revaluation of deferred taxes |  | ─ |  |  | ─ |  |  |  | (1.28 | )
Section 987 implementation |  | ─ |  |  |  | 2.69 |  |  | ─ |
Other |  |  | 0.13 |  |  |  | (0.42 | ) |  |  | 0.43 |
|  |  | 37.23 | % |  |  | 32.77 | % |  |  | 51.26 | %

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