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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 14. Income Taxes Income (loss) before income taxes, as shown in the accompanying Consolidated Statements of Operations, includes the following components for the years ended December 31, 2019 and 2018:
|  | Year Ended December 31, |  |  |  |
|  | 2019 |  | 2018 |  |
Domestic |  | $ | 12,230 |  |  | $ | (34,608) |  |  |
Foreign |  | 5,167 |  |  | 7,897 |  |  |
Income (loss) from operations, before income taxes |  | $ | 17,397 |  |  | $ | (26,711) |  |  |
Significant components of the provision for income taxes for the years ended December 31, 2019 and 2018 were as follows:
|  | Year Ended December 31, |  |  |  |
|  | 2019 |  | 2018 |  |
Current: |  |  |  |  |  |
Federal |  | $ | 1,909 |  |  | $ | 2,208 |  |  |
State |  | 505 |  |  | 172 |  |  |
Foreign |  | 1,925 |  |  | 3,675 |  |  |
Total current |  | 4,339 |  |  | 6,055 |  |  |
Deferred: |  |  |  |  |  |
Federal |  | (22,835) |  |  | (55) |  |  |
State |  | (6,173) |  |  | (8) |  |  |
Foreign |  | (502) |  |  | (1,535) |  |  |
Total deferred |  | (29,510) |  |  | (1,598) |  |  |
Total income tax (benefit) expense |  | $ | (25,171) |  |  | $ | 4,457 |  |  |
The reconciliation of income tax computed at statutory rates to income tax expense for the years ended December 31, 2019 and 2018 is as follows:
|  | Year Ended December 31, |  |  |  |  |  |  |  |  |  |
|  | 2019 |  |  |  | 2018 |  |  |  |  |  |
|  | Amount |  | Percent |  | Amount |  | Percent |  |  |  |
Statutory rate |  | $ | 3,653 |  |  | 21.0 | % |  | $ | (5,609) |  |  | 21.0 | % |  |  |  |
Foreign tax rate differential |  | 129 |  |  | 0.7 |  |  | 156 |  |  | (0.6) |  |  |  |  |
State income taxes, net of federal benefit |  | (59) |  |  | (0.3) |  |  | (706) |  |  | 2.6 |  |  |  |  |
Non-deductible expenses |  | 345 |  |  | 2.0 |  |  | 261 |  |  | (1.0) |  |  |  |  |
Global intangible low-taxed income, net of tax credits |  | 145 |  |  | 0.8 |  |  | 171 |  |  | (0.6) |  |  |  |  |
Income tax credits |  | (126) |  |  | (0.7) |  |  | (633) |  |  | 2.4 |  |  |  |  |
Nondeductible executive compensation |  | 234 |  |  | 1.3 |  |  | 351 |  |  | (1.3) |  |  |  |  |
Tax on unremitted foreign earnings |  | 216 |  |  | 1.2 |  |  | 149 |  |  | (0.6) |  |  |  |  |
Change in valuation allowance |  | (29,635) |  |  | (170.3) |  |  | 10,226 |  |  | (38.3) |  |  |  |  |
Other |  | (73) |  |  | (0.4) |  |  | 91 |  |  | (0.3) |  |  |  |  |
Total income tax (benefit) expense / Effective rate |  | $ | (25,171) |  |  | (144.7) | % |  | $ | 4,457 |  |  | (16.7) | % |  |  |  |
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows:
|  | December 31, |  |
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |
Goodwill and other intangibles |  | $ | 17,028 |  | 33 | $ | 18,756 |
Accrued settlement |  | 10,196 |  |  | 11,933 |
Deferred compensation |  | 3,620 |  |  | 2,940 |
Contingent liabilities |  | 1,816 |  |  | 1,663 |
Net operating loss / tax credit carryforwards |  | 1,438 |  |  | 1,602 |
Pension and post-retirement liability |  | 1,414 |  |  | 1,524 |
Warranty reserve |  | 294 |  |  | 346 |
Accounts receivable |  | 261 |  |  | 214 |
Other |  | 725 |  |  | 644 |
Total deferred tax assets |  | 36,792 |  |  | 39,622 |
Less: valuation allowance |  | (1,072) |  |  | (30,707) |
Net deferred tax assets |  | 35,720 |  |  | 8,915 |
Deferred tax liabilities: |  |  |  |
Goodwill and other intangibles |  | (4,454) |  |  | (5,020) |
Depreciation |  | (5,946) |  |  | (6,625) |
Inventories |  | (946) |  |  | (2,125) |
Unremitted earnings of foreign subsidiaries |  | (390) |  |  | (160) |
Other |  | (97) |  |  | (272) |
Total deferred tax liabilities |  | (11,833) |  |  | (14,202) |
Net deferred tax assets (liabilities) |  | $ | 23,887 |  |  | $ | (5,287) |
Each quarter, management reviews operations and liquidity needs in each jurisdiction to assess the Company’s intent to reinvest foreign earnings outside of the United States. As of December 31, 2019, management determined that cash balances of its Canadian and United Kingdom subsidiaries exceeded projected capital needs by $7,800. Management does not intend for such amounts to be permanently reinvested outside of the United States and has therefore accrued foreign withholding taxes of $390 as of December 31, 2019. It is management’s intent and practice to indefinitely reinvest other undistributed earnings outside of the United States. Determination of the amount of any unrecognized deferred income tax liability associated with these undistributed earnings is not practicable because of the complexities of the hypothetical calculation. A valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company has considered all available evidence, both positive and negative, in assessing the need for a valuation allowance in each jurisdiction. During 2019, the Company reversed $29,648 of its valuation allowance previously recorded against U.S. deferred tax assets. The positive evidence considered in evaluating U.S. deferred tax assets included cumulative financial income over the three-year period ended December 31, 2019, as well as the composition and reversal patterns of existing taxable and deductible temporary differences between financial reporting and tax. Based on our evaluation, the Company believed it was appropriate to rely on forecasted future taxable income to support its U.S. deferred tax assets. The amount of deferred tax assets considered realizable, however, could be adjusted if negative evidence outweighs additional subjective evidence such as our projections for growth. As of December 31, 2019 and 2018, the tax benefit of net operating loss carryforwards available for state income tax purposes was $901 and $1,253, respectively. The state net operating loss carryforwards will expire in various years through 2039. We believe it is more likely than not that a portion of the tax benefit from state operating loss carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $388 against deferred tax assets related to state operating loss carryforwards as of December 31, 2019. As of December 31, 2019, the Company has foreign tax credit carryforwards in the amount of $34 that will expire in 2028 through 2029. We believe it is more likely than not that the tax benefit from foreign tax credit carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $34 against deferred tax assets related to foreign tax credit carryforwards at December 31, 2019. As of December 31, 2019, the Company has net operating loss carryforwards in certain foreign jurisdictions of $2,019, which may be carried forward indefinitely. The foreign jurisdictions have incurred cumulative financial losses over the three-year period ended December 31, 2019 and have projected future taxable losses. We believe it is more likely than not that the tax benefit from these loss carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $650, collectively, against deferred tax assets in foreign jurisdictions as of December 31, 2019. The determination to record or not record a valuation allowance involves management judgment, based on the consideration of positive and negative evidence available at the time of the assessment. Management will continue to assess the realization of its deferred tax assets based upon future evidence, and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income. The following table provides a reconciliation of unrecognized tax benefits as of December 31, 2019 and 2018:
|  | December 31, |  |
|  | 2019 |  | 2018
Unrecognized tax benefits at beginning of period: |  | $ | 481 |  |  | $ | 599 |
Decreases based on tax positions for prior periods |  | (67) |  |  | (118) |
Balance at end of period |  | $ | 414 |  |  | $ | 481 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $414 as of December 31, 2019. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 31, 2019 and 2018, the Company had accrued interest and penalties related to unrecognized tax benefits of $327 and $398, respectively. As of December 31, 2019, the Company did not expect any material increases or decreases to its unrecognized tax benefits within the next 12 months. Ultimate realization of these tax benefits is dependent upon the occurrence of certain events, including the completion of audits by tax authorities and expiration of statutes of limitations. The Company files income tax returns in the United States and in various state, local, and foreign jurisdictions. The Company is subject to federal income tax examinations for the 2016 period and thereafter. With respect to the state, local, and foreign filings, certain entities of the Company are subject to income tax examinations for the 2015 period and thereafter.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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