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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
 
Income (loss) from continuing operations before provision for income taxes are taxed under the following jurisdictions (dollar amounts in thousands):
Year Ended December 31,20242023
Domestic$(29,434)$(15,962)
Foreign47,860 36,164 
Total$18,426 $20,202 
 
Components of the provision for income taxes for each of the two years in the period ended December 31, 2024 are as follows (dollar amounts in thousands):
Year Ended December 31,20242023
Current:  
Federal$1,061 $1,875 
State824 361 
Foreign10,311 9,605 
Subtotal12,196 11,841 
Deferred:  
Federal(1,705)(8,277)
State(1,109)(490)
Foreign1,152 712 
Subtotal(1,662)(8,055)
Total provision for income taxes$10,534 $3,786 
 
The provision for income taxes, as a percentage of income from continuing operations before provision for income taxes, differs from the statutory U.S. federal income tax rate due to the following:
Year Ended December 31,20242023
Statutory U.S. federal income tax rate21.0 %21.0 %
State income taxes, net of U.S. federal income tax benefit(1.2)(0.4)
U.S. tax impact of foreign operations(9.2)(25.3)
Valuation allowance change6.0 5.4 
Unrecognized tax benefits1.8 1.8 
Permanent foreign items5.2 4.8 
Withholding tax on royalties29.3 5.1 
Executive compensation3.3 1.2 
Stock compensation(0.2)(0.1)
Tax return to provision differences(1.0)(7.9)
Income eliminated in consolidation1.9 13.8 
Other0.3 (0.7)
Effective income tax rate57.2 %18.7 %

Adjustments relating to the U.S. impact of foreign operations decreased the effective tax rate by 9.2 percentage points and 25.3 percentage points in 2024 and 2023, respectively. The components of this calculation were:
Components of U.S. tax impact of foreign operations20242023
Foreign tax credits1.0 %(26.7)%
Foreign tax rate differentials0.1 0.4 
Foreign withholding taxes3.9 4.5 
Transfer pricing adjustment0.8 1.4 
Impact of Subpart F— 0.7 
Impact of GILTI(0.8)(2.4)
Impact of FDII(14.2)(3.2)
Total(9.2)%(25.3)%
The significant components of the deferred tax assets (liabilities) are as follows (dollar amounts in thousands):
As of December 31,20242023
Inventory$2,159 $1,881 
Accrued liabilities2,256 2,263 
Operating lease liabilities2,136 2,363 
Deferred compensation215 166 
Share-based compensation1,260 1,059 
Intangible assets112 101 
Bad debts12 23 
Net operating losses5,407 4,358 
Foreign tax and withholding credits12,393 16,707 
Accrued compensation1,096 2,178 
Fixed assets8,824 2,606 
Other deferred tax assets2,770 2,135 
Valuation allowance(18,864)(18,534)
Total deferred tax assets19,776 17,306 
Right of use assets(1,867)(2,082)
Tax on unremitted earnings(1,233)(1,508)
Other deferred tax liabilities(39)(53)
Total deferred tax liabilities(3,139)(3,643)
Total deferred taxes, net$16,637 $13,663 

The components of deferred tax assets (liabilities), net are as follows (dollar amounts in thousands):
As of December 31,20242023
Net deferred tax assets$17,644 $15,064 
Net deferred tax liabilities(1,007)(1,401)
Total deferred taxes, net$16,637 $13,663 

We have elected the period cost method (costs are treated as a current period expense when incurred) under U.S. GAAP as it relates to GILTI income inclusions in U.S. taxable income. Each reporting period we analyze our indefinite reinvestment assertions with respect to undistributed foreign earnings. As of December 31, 2024, we continue to assert that we do not intend to reinvest undistributed foreign earnings indefinitely in our foreign subsidiaries.
 
We have provided a valuation allowance of $18.9 million and $18.5 million as of December 31, 2024 and 2023, respectively, for certain deferred tax assets, including foreign net operating losses, for which we cannot conclude it is more likely than not that they will be realized. We reviewed our tax positions and removed the deferred tax asset and associated valuation allowance for tax credits which expired at the end of the period. We increased the valuation allowance for other deferred tax assets which we do not expect to use before expiration. For financial reporting purposes, the increase in valuation allowances increases income tax expense in the year recorded. At December 31, 2024, we had approximately $12.4 million of foreign tax and withholding credits. Of the $12.4 million credits, $12.1 million are foreign tax credits, many of which we do not expect to use before expiration and are offset by a valuation allowance.
 
At December 31, 2024, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $5.4 million, tax effected. The net operating losses will expire at various dates from 2025 through 2035, with the exception of those in some foreign jurisdictions where there is no expiration. The foreign net operating losses have a valuation allowance recorded against the portion expected to expire before utilization.
 
We are subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. We believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and
regulations; (iii) the issuance of tax rulings and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to our reserves, which would impact our reported financial results.
 
Our U.S. federal income tax returns for 2021 through 2023 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years from 2019 through 2023.

The total outstanding balance for liabilities related to unrecognized tax benefits at December 31, 2024 and 2023 was $0.9 million and $0.6 million, respectively, all of which would favorably impact the rate if recognized. Included in these amounts is approximately $0.1 million and $0.1 million, respectively, of combined interest and penalties. We increased interest and penalties approximately $8,000 and $13,000 for the years ended December 31, 2024 and 2023, respectively. We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision.
 
During the years ended December 31, 2024 and 2023, we added approximately $0.3 million and $0.4 million, respectively, to our liability for unrecognized tax benefits.
 
A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits, excluding interest and penalties, is as follows for the years (dollar amounts in thousands):
Year Ended December 31,20242023
Unrecognized tax benefits, opening balance$471 $110 
Settlement of liability reclassified as income tax payable— — 
Payments on liability— — 
Tax positions taken in a prior period  
Gross increases318 360 
Gross decreases— — 
Tax positions taken in the current period  
Gross increases— — 
Gross decreases— — 
Lapse of applicable statute of limitations— — 
Currency translation adjustments(10)1 
Unrecognized tax benefits, ending balance$779 $471 
 
We do not anticipate a significant change to liabilities related to unrecognized tax benefits within the next twelve months.

Although we believe our estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such determination.