XML 49 R21.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Components of the income tax (benefit) expense are as follows (in thousands):
| Years ended December 31,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | (22,923 | ) |  | $ | — |  |  | $ | (1,126 | )
State | (2,295 | ) |  | 97 |  |  | 587 |
Foreign | (238 | ) |  | (740 | ) |  | 488 |
Total current | (25,456 | ) |  | (643 | ) |  | (51 | )
Deferred: |  |  |  |  |
Federal | 23,910 |  |  | (6,585 | ) |  | 5,994 |
State | 1,345 |  |  | (89 | ) |  | 214 |
Foreign | — |  |  | 101 |  |  | (45 | )
Total deferred | 25,255 |  |  | (6,573 | ) |  | 6,163 |
Income tax (benefit) expense | $ | (201 | ) |  | $ | (7,216 | ) |  | $ | 6,112 |
The components of (loss) income before income taxes are as follows (in thousands):
| Years ended December 31,
| 2019 |  | 2018 |  | 2017
United States | $ | (76,758 | ) |  | $ | (80,034 | ) |  | $ | (10,025 | )
Foreign | (178 | ) |  | (623 | ) |  | (1,367 | )
Loss before income taxes | $ | (76,936 | ) |  | $ | (80,657 | ) |  | $ | (11,392 | )
A reconciliation of the U.S. federal statutory tax rate to the effective income tax rate is as follows:
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
State income taxes, net of federal benefit | 0.6 |  |  | 0.8 |  |  | (3.2 | )
Non-U.S. income taxed at different rates | 0.5 |  |  | 0.8 |  |  | (4.3 | )
(Increase) decrease in valuation allowance | (19.9 | ) |  | (3.6 | ) |  | 0.1 |
Impact of 2017 Tax Cuts and Jobs Act | — |  |  | — |  |  | (64.2 | )
Net operating loss carryback adjustment | — |  |  | — |  |  | — |
Reduction in tax benefit related to stock-based awards | (0.1 | ) |  | (1.0 | ) |  | (16.9 | )
Non-deductible expenditures and goodwill | — |  |  | (9.0 | ) |  | (3.9 | )
Research and development credit | 0.2 |  |  | 0.3 |  |  | 3.6 |
Other | (2.0 | ) |  | (0.4 | ) |  | 0.1 |
Effective income tax rate | 0.3 | % |  | 8.9 | % |  | (53.7 | )%
Fluctuations in effective tax rates have historically been impacted by permanent tax differences with no associated income tax impact, changes in state apportionment factors, including the effect on state deferred tax assets and liabilities, and non-U.S. income taxed at different rates. Comprehensive tax reform legislation enacted in December 2017, commonly referred to as the Tax Cuts and Jobs Acts (“2017 Tax Act”), makes significant changes to U.S. federal income tax laws. The 2017 Tax Act, among other things, reduces the corporate income tax rate from 35% to 21%, partially limits the deductibility of business interest expense and net operating losses, provides additional limitations on the deductibility of executive compensation, imposes a one-time tax on unrepatriated earnings from certain foreign subsidiaries, taxes offshore earnings at reduced rates regardless of whether they are repatriated, and allows the immediate deduction of certain new investments instead of deductions for depreciation expense over time. The Company had not completed its determination of the 2017 Tax Act and recorded provisional amounts in its financial statements as of December 31, 2017. The Company recorded a provisional expense for the effects of the 2017 Tax Act of $7.3 million. The effects of the 2017 Tax Act on the Company include three main categories: 1) remeasurement of the net deferred tax assets from 35% to 21%, which resulted in tax expense of $5.5 million; 2) a one-time tax on unrepatriated earnings from certain foreign subsidiaries of $0.2 million; and 3) additional limitations on the deductibility of executive compensation, which resulted in tax expense of $1.6 million. The Company completed its review of the 2017 Tax Act in 2018, and there were no material changes in the measurement period. Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the value reported for income tax purposes, at the enacted tax rates expected to be in effect when the differences reverse. The components of deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2019 |  | 2018
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 17,248 |  |  | $ | 30,241 |
Allowance for doubtful accounts | 1,037 |  |  | 1,073 |
Inventory valuation reserves | 629 |  |  | 1,057 |
Equity compensation | 353 |  |  | 548 |
Goodwill | 965 |  |  | 1,089 |
Accrued compensation | 587 |  |  | 342 |
Foreign tax credit carryforward | 3,894 |  |  | 4,041 |
Settlement liability | 3,530 |  |  | — |
Lease liability | 3,992 |  |  | — |
Interest expense limitation | — |  |  | 534 |
Other | 96 |  |  | 50 |
Total gross deferred tax assets | 32,331 |  |  | 38,975 |
Valuation allowance | (19,878 | ) |  | (4,042 | )
Total deferred tax assets, net | 12,453 |  |  | 34,933 |
Deferred tax liabilities: |  |  |
Property and equipment | (3,696 | ) |  | (6,613 | )
Intangible assets | (4,597 | ) |  | (9,657 | )
ROU asset | (3,793 | ) |  | — |
Prepaid insurance and other | (331 | ) |  | — |
Total gross deferred tax liabilities | (12,417 | ) |  | (16,270 | )
Net deferred tax assets | $ | 36 |  |  | $ | 18,663 |
As of December 31, 2019, the Company had U.S. net operating loss carryforwards of $68.9 million, including $49.6 million expiring in various amounts in 2035 through 2037 which can offset 100% of taxable income and $19.3 million that has an indefinite carryforward period which can offset 80% of taxable income per year. The ability to utilize net operating losses and other tax attributes could be subject to a significant limitation if the Company were to undergo an “ownership change” for purposes of Section 382 of the Tax Code. Net deferred tax assets arise due to the recognition of income and expense items for tax purposes, which differ from those used for financial statement purposes. ASC 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not. In assessing the need for a valuation allowance in the second quarter of 2018, the Company considered all available objective and verifiable evidence, both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, and expectations and risks associated with estimates of future pre-tax income. As a result of this analysis, the Company determined that it is more likely than not that it will not realize the benefits of certain deferred tax assets and, therefore, recorded a $15.5 million valuation allowance against the carrying value of net deferred tax assets, except for deferred tax liabilities related to non-amortizable intangible assets and certain state jurisdictions. As all available evidence should be taken into consideration when assessing the need for a valuation allowance, the subsequent events that occurred in the first quarter of 2019 provided a source of income to support the release of $11.5 million of the valuation allowance which resulted in a deferred tax asset of $18.7 million. As such, the Company reversed this portion of the valuation allowance during the fourth quarter of 2018. At December 31, 2019, the valuation allowance against the net federal and state deferred tax assets was $19.9 million. The Company has not calculated U.S. taxes on unremitted earnings of certain non-U.S. subsidiaries due to the Company’s intent to reinvest the unremitted earnings of the non-U.S. subsidiaries. At December 31, 2019, the Company had approximately $2.3 million in unremitted earnings for one of its foreign jurisdictions, which were not included for U.S. tax purposes. Due to the 2017 Tax Act, U.S. federal transition taxes have been recorded for a one-time U.S. tax liability on these earnings which have not previously been repatriated to the U.S. However, certain withholding taxes will need to be paid upon repatriation. It is not practicable to estimate the amount of the deferred tax liability on such unremitted earnings. The Company has performed an evaluation and concluded there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The evaluation was performed for the tax years which remain subject to examination by tax jurisdictions as of December 31, 2019, which are the years ended December 31, 2015 through December 31, 2019 for U.S. federal taxes and the years ended December 31, 2014 through December 31, 2019 for state tax jurisdictions. At December 31, 2019, the Company had no unrecognized tax benefits. In January 2017, the Internal Revenue Service notified the Company that it would examine the Company’s “IRS” federal tax returns for the year ended December 31, 2014. The examination included (1) the corporate returns and (2) employment tax matters. The IRS fieldwork has been completed in relation to the corporate returns with no adverse findings. Further discussion of the employment tax matter can be found in Note 19 ---“Related Party Transaction.”

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration