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Note 16 - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
16. | INCOME TAXES:
The United States and foreign components of Income before income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
United States |  | $ | 24,768 |  |  | $ | 32,244 |  |  | $ | 16,207 |
Foreign |  |  | 866 |  |  |  | 396 |  |  |  | 853 |
Total |  | $ | 25,634 |  |  | $ | 32,640 |  |  | $ | 17,060 |
The components of Income tax expense (benefit) are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 958 |  |  | $ | 174 |  |  | $ | (117 | )
State |  |  | 1,342 |  |  |  | (16 | ) |  |  | 99 |
Foreign |  |  | 243 |  |  |  | 439 |  |  |  | 395 |
Total current income tax expense |  |  | 2,543 |  |  |  | 597 |  |  |  | 377 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 4,380 |  |  |  | 3,597 |  |  |  | (2,954 | )
State |  |  | (386 | ) |  |  | 561 |  |  |  | (807 | )
Foreign |  |  | 47 |  |  |  | (17 | ) |  |  | 132 |
Total deferred income tax expense (benefit) |  |  | 4,041 |  |  |  | 4,141 |  |  |  | (3,629 | )
Total income tax expense (benefit) |  | $ | 6,584 |  |  | $ | 4,738 |  |  | $ | (3,252 | )
The difference between the Company’s effective income tax rate and the federal statutory income tax rate is explained as follows (dollar amounts in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Income tax expense at federal statutory rate |  | $ | 5,383 |  |  | $ | 6,854 |  |  | $ | 3,583 |
State expense (benefit), net of federal income tax effect |  |  | 953 |  |  |  | 1,261 |  |  |  | (218 | )
Federal and state income tax credits |  |  | - |  |  |  | - |  |  |  | (7 | )
Change in valuation allowance |  |  | (181 | ) |  |  | (3,564 | ) |  |  | (2,618 | )
Tax windfall on share-based compensation |  |  | - |  |  |  | - |  |  |  | (369 | )
Bargain purchase gain |  |  | - |  |  |  | - |  |  |  | (4,228 | )
Nondeductible expenses |  |  | 447 |  |  |  | (24 | ) |  |  | 427 |
Foreign rate differential |  |  | 78 |  |  |  | 36 |  |  |  | 77 |
Other |  |  | (96 | ) |  |  | 175 |  |  |  | 101 |
Income tax expense (benefit) |  | $ | 6,584 |  |  | $ | 4,738 |  |  | $ | (3,252 | )
Effective income tax rate |  |  | 25.7 | % |  |  | 14.5 | % |  |  | (19.1 | )%
The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Accrued employee benefits |  | $ | 3,525 |  |  | $ | 3,089 |
Inventories |  |  | 73 |  |  |  | 147 |
Trade receivable, net |  |  | 958 |  |  |  | 788 |
Net operating loss carryforwards |  |  | 3,231 |  |  |  | 5,391 |
Tax credit carryforwards |  |  | 2,699 |  |  |  | 5,173 |
Other |  |  | 389 |  |  |  | 509 |
|  |  | 10,875 |  |  |  | 15,097 |
Valuation allowance |  |  | (6,228 | ) |  |  | (6,126 | )
|  |  | 4,647 |  |  |  | 8,971 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Contract assets, net |  |  | (1,366 | ) |  |  | (1,703 | )
Property and equipment |  |  | (12,029 | ) |  |  | (10,578 | )
Intangible assets |  |  | (2,737 | ) |  |  | (226 | )
Prepaid expenses |  |  | (889 | ) |  |  | (587 | )
|  |  | (17,021 | ) |  |  | (13,094 | )
Net deferred income tax liabilities |  | $ | (12,374 | ) |  | $ | (4,123 | )
Amounts are presented in the Consolidated Balance Sheets as follows: |  |  |  |  |  |  |  |
Deferred income tax assets, included in Other assets |  | $ | 107 |  |  | $ | 142 |
Deferred income taxes |  |  | (12,481 | ) |  |  | (4,265 | )
Net deferred income tax liabilities |  | $ | (12,374 | ) |  | $ | (4,123 | )
In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, taxable income in carryback periods, and tax planning strategies in making this assessment. Because the Company has a recent history of generating cumulative losses, management did not consider projections of future taxable income as persuasive evidence for the recoverability of its deferred income tax assets. The Company believes it is more likely than not it will realize the benefits of its deductible differences as of December 31, 2020, net of any valuation allowance. As of December 31, 2020, the Company had approximately $2.0 million of federal income tax credit carryforwards, which expire on various dates between 2023 and 2034, and $1.0 million of capital loss carryforwards, which expire in 2024. As of December 31, 2020, the Company also had approximately $30.0 million of state net operating loss carryforwards, which expire on various dates between 2021 and 2038, and state income tax credit carryforwards of $4.2 million, which begin to expire in 2021. As of December 31, 2020, the Company also had approximately $4.4 million of foreign net operating loss carryforwards, which expire on various dates between 2023 and 2030. The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is no longer subject to United States Federal, state, or foreign income tax examinations for years before 2016. A summary of the changes in the unrecognized income tax benefits is presented below (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Unrecognized income tax benefits, beginning of year |  | $ | 4,350 |  |  | $ | 4,350 |  |  | $ | 4,116 |
Increases for positions taken in the current year |  |  | - |  |  |  | - |  |  |  | 234 |
Unrecognized income tax benefits, end of year |  | $ | 4,350 |  |  | $ | 4,350 |  |  | $ | 4,350 |
The Company does not believe it is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following twelve months; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affect the Company’s effective income tax rate if recognized at some point in the future. The Company recognizes interest and penalties related to uncertain income tax positions in Income tax expense (benefit). As of December 31, 2020 and 2019, the Company had no accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did not change materially in 2020, 2019, or 2018. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. Additionally, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. As of December 22, 2018, the end of the measurement period for purposes of SAB 118, the Company had completed the analysis based on available legislative updates relating to the TCJA, which did not result in material changes from the amount recorded in 2017. On January 1, 2019, the Company adopted Accounting Standards Update No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which resulted in a reclassification of $0.2 million from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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