XML 47 R26.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income taxes |
20. | Income taxes
Income (loss) before provision for income taxes consisted of the following:
|  | Year Ended December 31, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. |  | $ | (5,987 | ) |  | $ | 5,556 |  |  | $ | (24,890 | )
Non-U.S. |  |  | (7,508 | ) |  |  | (5,924 | ) |  |  | (2,159 | )
Income (loss) before income taxes |  | $ | (13,495 | ) |  | $ | (368 | ) |  | $ | (27,049 | )
The provision for income taxes consists of the following:
|  | Year Ended December 31, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (607 | ) |  | $ | (15,054 | ) |  | $ | (1,911 | )
Deferred |  |  | 24,292 |  |  |  | (29 | ) |  |  | 2,008 |
|  |  | 23,685 |  |  |  | (15,083 | ) |  |  | 97 |
Non-U.S. |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 1,009 |  |  |  | 1,382 |  |  |  | 1,931 |
Deferred |  |  | 190 |  |  |  | 10,816 |  |  |  | (615 | )
|  |  | 1,199 |  |  |  | 12,198 |  |  |  | 1,316 |
Income tax expense (benefit) |  | $ | 24,884 |  |  | $ | (2,885 | ) |  | $ | 1,413 |
The differences between the income tax provision at the U.S. federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2021, 2020, and 2019, consist of the following:
|  | 2021 |  |  | 2020 |  |  | 2019 |
(U.S. Dollars, in thousands, except percentages) |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Statutory U.S. federal income tax rate |  | $ | (2,834 | ) |  |  | 21.0 | % |  | $ | (77 | ) |  |  | 21.0 | % |  | $ | (5,680 | ) |  |  | 21.0 | %
State taxes, net of U.S. federal benefit |  |  | (24 | ) |  |  | 0.2 |  |  |  | 1,151 |  |  |  | (312.8 | ) |  |  | 1,043 |  |  |  | (3.9 | )
Foreign rate differential, including withholding taxes |  |  | 480 |  |  |  | (3.6 | ) |  |  | (147 | ) |  |  | 39.9 |  |  |  | 131 |  |  |  | (0.5 | )
Valuation allowances, net |  |  | 27,819 |  |  |  | (206.1 | ) |  |  | 14,514 |  |  |  | (3,944.0 | ) |  |  | (165 | ) |  |  | 0.6 |
Research credits |  |  | (537 | ) |  |  | 4.0 |  |  |  | (982 | ) |  |  | 266.8 |  |  |  | (829 | ) |  |  | 3.1 |
Unrecognized tax benefits, net of settlements |  |  | (1,363 | ) |  |  | 10.1 |  |  |  | (17,321 | ) |  |  | 4,706.8 |  |  |  | (2,745 | ) |  |  | 10.1 |
Equity compensation |  |  | 1,091 |  |  |  | (8.1 | ) |  |  | 1,657 |  |  |  | (450.3 | ) |  |  | 626 |  |  |  | (2.3 | )
Executive compensation |  |  | 456 |  |  |  | (3.4 | ) |  |  | 375 |  |  |  | (101.9 | ) |  |  | 1,504 |  |  |  | (5.6 | )
Contingent consideration |  |  | (640 | ) |  |  | 4.7 |  |  |  | (1,460 | ) |  |  | 396.7 |  |  |  | 5,678 |  |  |  | (21.0 | )
Other, net |  |  | 436 |  |  |  | (3.2 | ) |  |  | (595 | ) |  |  | 161.8 |  |  |  | 1,850 |  |  |  | (6.7 | )
Income tax expense (benefit) /effective rate |  | $ | 24,884 |  |  |  | (184.4 | )% |  | $ | (2,885 | ) |  |  | 784.0 | % |  | $ | 1,413 |  |  |  | (5.2 | )%
The Company paid cash relating to taxes totaling $4.8 million, less than $0.5 million, and $8.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. The Company’s deferred tax assets and liabilities are as follows:
|  | December 31, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |
Intangible assets and goodwill |  | $ | 5,245 |  |  | $ | 2,475 |
Inventories and related reserves |  |  | 17,097 |  |  |  | 17,585 |
Deferred revenue and cost of goods sold |  |  | 3,888 |  |  |  | 4,035 |
Other accruals and reserves |  |  | 3,082 |  |  |  | 4,061 |
Accrued compensation |  |  | 7,784 |  |  |  | 8,734 |
Provision for expected credit losses |  |  | 1,217 |  |  |  | 1,178 |
Net operating loss and tax credit carryforwards |  |  | 42,546 |  |  |  | 42,569 |
Lease liabilities |  |  | 5,691 |  |  |  | 6,033 |
Other, net |  |  | 1,423 |  |  |  | 500 |
Total deferred tax assets |  |  | 87,973 |  |  |  | 87,170 |
Valuation allowance |  |  | (76,725 | ) |  |  | (50,496 | )
Deferred tax asset, net of valuation allowance |  | $ | 11,248 |  |  | $ | 36,674 |
Withholding taxes |  |  | (10 | ) |  |  | (40 | )
Property, plant, and equipment |  |  | (5,380 | ) |  |  | (5,975 | )
Right-of-use lease assets |  |  | (5,165 | ) |  |  | (5,617 | )
Deferred tax liability |  |  | (10,555 | ) |  |  | (11,632 | )
Net deferred tax assets |  | $ | 693 |  |  | $ | 25,042 |
Reported as: |  |  |  |  |  |  |  |
Deferred income tax assets |  |  | 1,771 |  |  |  | 25,042 |
Deferred income tax liabilities (classified within other long-term liabilities) |  |  | (1,078 | ) |  |  | — |
Net deferred tax assets |  | $ | 693 |  |  | $ | 25,042 |
The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and income tax basis of assets and liabilities, and for operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the years in which those items are expected to be realized. Tax law and rate changes are recorded in the period such changes are enacted. The Company establishes a valuation allowance when it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future. The valuation allowance is primarily attributable to net operating loss carryforwards and temporary differences in domestic and certain foreign jurisdictions. The net increase in the valuation allowance of $26.2 million during the year principally relates to recognizing a full valuation allowance against the net deferred tax asset within the Company’s U.S. operations as well as an increase in valuation allowance against deferred tax assets within the Company’s Italian manufacturing subsidiary. The Company considered many factors when assessing the likelihood of future realization of these deferred tax assets, including recent cumulative losses experienced by the subsidiary, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors. That increase was partially offset by a decrease of valuation allowances on net operating loss carryforwards in other foreign jurisdictions due to expiration, statutory rate changes, and changes regarding the realizability of net deferred tax assets. It is reasonably possible that the valuation allowance will increase in 2022 due to further losses in certain jurisdictions, offset by decreases related to the expiration of foreign net operating losses. The Company has federal net operating loss carryforwards of $17.5 million and research and development credits of $2.2 million, including amounts from the acquisition of Spinal Kinetics. These carryforwards are subject to limitation under the provisions of Section 382 and will begin to expire in 2026. The Company has state net operating loss carryforwards of approximately $32.3 million, of which $20.9 million relates to Spinal Kinetics and begins to expire in 2027. Additionally, the Company has net operating loss carryforwards in various foreign jurisdictions of approximately $125.0 million that begin to expire in 2022, the majority of which relate to the Company’s Italy, Netherlands, and Brazil operations. Unremitted foreign earnings decreased from $53.7 million at December 31, 2020, to $50.0 million at December 31, 2021. The decrease is due to the impact of currency translation. As a result of the 2017 Tax Act, current year earnings have been deemed to be repatriated. Those foreign subsidiary earnings that are subject to U.S. taxation as a component of Global Intangible Low Taxed Income (GILTI) under the Tax Act are included as a component of current tax expense. The Company’s investment in foreign subsidiaries continues to be indefinite in nature; however, the Company may periodically repatriate a portion of these earnings to the extent that it does not incur significant additional tax liability. The Company records a benefit for uncertain tax positions when the weight of available evidence indicates that it is more likely than not, based on an evaluation of the technical merits, that the tax position will be sustained on audit. The tax benefit is measured as the largest amount that is more than 50% likely to be realized upon settlement. The Company re-evaluates income tax positions periodically to consider changes in facts or circumstances such as changes in or interpretations of tax law, effectively settled issues under audit, and new audit activity. The Company includes interest and any applicable penalties related to income tax issues as part of income tax expense in its consolidated financial statements. The Company’s unrecognized tax benefit was $3.5 million and $4.6 million for the years ended December 31, 2021, and 2020, respectively. The Company recorded net interest and penalties expense (benefit) on unrecognized tax benefits of $(0.4) million, $(5.4) million, and $(0.1) million for the years ended December 31, 2021, 2020, and 2019, respectively, and had approximately $0.8 million and $1.2 million accrued for payment of interest and penalties as of December 31, 2021, and 2020, respectively. The entire amount of unrecognized tax benefits, including interest, would favorably impact the Company’s effective tax rate if recognized. The Company believes it is reasonably possible that, in the next 12 months, the amount of unrecognized tax benefits, exclusive of interest and penalties, related to the resolution of federal, state, and foreign matters could be reduced by $0.4 million to $1.1 million as audits close and statutes expire. A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2021, and 2020, is shown below:
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |
Balance as of January 1, |  | $ | 4,629 |  |  | $ | 16,904 |
Additions for current year tax positions |  |  | 45 |  |  |  | 568 |
Increases for prior year tax positions |  |  | 110 |  |  |  | 84 |
Settlements of prior year tax positions |  |  | — |  |  |  | (29 | )
Expiration of statutes |  |  | (1,322 | ) |  |  | (12,898 | )
Balance as of December 31, |  | $ | 3,462 |  |  | $ | 4,629 |
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in certain state and foreign jurisdictions, including Italy, as well as other jurisdictions where the Company maintains operations. The statute of limitations with respect to federal and state tax filings is closed for years prior to 2017. The statute of limitations with respect to the major foreign tax filing jurisdictions is closed for years prior to 2015. In November 2017, the Company was notified of an examination of its federal income tax return for 2015. In February 2019, the Company reached an agreement and concluded this examination. As a result, the Company recognized a benefit of approximately $1.8 million during 2019. The Company cannot reasonably determine if any state and local or foreign examinations will have a material impact on its financial statements and cannot predict the timing regarding the resolution of these tax examinations.

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=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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration