Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income (loss) before income taxes and income tax expense (benefit) are as follows:



(In thousands)	2018			2017			2016
Income (loss) before income taxes:
Domestic	$	17,663		$	67,549		$	26,284
Foreign	18,705			(82,461		)	1,399
Total	$	36,368		$	(14,912	)	$	27,683
Current income tax expense (benefit):
Federal	$	(187	)	$	(20,560	)	$	4,302
State	815			800			(709		)
Foreign	2,090			3,247			3,255
Total	2,718			(16,513		)	6,848
Deferred income tax expense (benefit):
Federal	8,708			(23,302		)	(2,505		)
State	364			(949		)	1,396
Foreign	(264		)	(12,399		)	(2,522		)
Total	8,808			(36,650		)	(3,631		)
Total income tax expense (benefit)	$	11,526		$	(53,163	)	$	3,217



	2018					2017					2016
(In thousands, except percentages)	Amount			%		Amount			%		Amount			%
Income tax expense (benefit) at federal statutory rate	$	7,638		21.0		$	(5,219	)	35.0		$	9,689		35.0
U.S. tax on foreign branch income	1,901			5.2		—			—		—			—
Foreign rate differences	1,805			5.0		2,546			(17.1	)	499			1.8
Non-deductible goodwill and asset impairment loss	1,801			5.1		228			(1.5	)	13			—
Tax contingency accruals and tax settlements	773			2.1		(420		)	2.8		104			0.4
Valuation allowance for capital loss carryforwards	553			1.5		83			(0.6	)	267			1.0
State taxes, net of federal income tax benefit	520			1.4		656			(4.4	)	647			2.3
Non-deductible expenses	322			0.9		434			(2.9	)	396			1.4
Stock-based compensation	175			0.5		199			(1.3	)	—			—
Unremitted earnings from foreign operations	126			0.3		—			—		(256		)	(0.9	)
Worthless stock deductions	—			—		(61,413		)	411.9		—			—
Impact of U.S. Tax Cuts and Jobs Act	—			—		(4,433		)	29.7		—			—
Settlement of Terphane acquisition escrow	—			—		(4,200		)	28.2		—			—
Increase in value of kaléo investment held abroad	—			—		(2,326		)	15.6		(197		)	(0.7	)
Domestic production activities deduction	—			—		—			—		(735		)	(2.7	)
Remitted earnings from foreign operations	—			—		—			—		(6,574		)	(23.7	)
Changes in estimates related to prior year tax provision	(303		)	(0.8	)	320			(2.1	)	330			1.2
Research and development tax credit	(420		)	(1.2	)	(375		)	2.5		(550		)	(2.0	)
Valuation allowance due to foreign losses and impairments	(975		)	(2.7	)	20,757			(139.3	)	(416		)	(1.5	)
Foreign derived intangible income deduction	(1,050		)	(2.9	)	—			—		—			—
Brazilian tax incentive	(1,340		)	(3.7	)	—			—		—			—
Income tax expense (benefit) at effective income tax rate	$	11,526		31.7		$	(53,163	)	356.5		$	3,217		11.6

liabilities and deferred income tax assets at December 31, 2018 and 2017, are as follows:



(In thousands)	2018			2017
Deferred income tax liabilities:
Amortization of goodwill and identifiable intangibles	$	13,416		$	22,739
Foreign currency translation gain adjustment	300			433
Excess of carrying value over tax basis of investment in kaléo	15,131			8,602
Derivative financial instruments	—			167
Other	184			—
Total deferred income tax liabilities	29,031			31,941
Deferred income tax assets:
Depreciation	2,399			4,917
Pensions	17,153			19,626
Employee benefits	6,676			6,842
Excess capital losses	1,519			4,695
Inventory	3,644			2,884
Asset write-offs, divestitures and environmental accruals	1,200			1,754
Tax benefit on U.S. federal, state and foreign NOL and credit carryforwards	23,507			33,384
Timing adjustment for unrecognized tax benefits on uncertain tax positions, including portion relating to interest and penalties	267			184
Allowance for doubtful accounts	382			406
Derivative financial instruments	432			—
Other	—			261
Deferred income tax assets before valuation allowance	57,179			74,953
Less: Valuation allowance	24,736			28,499
Total deferred income tax assets	32,443			46,454
Net deferred income tax (assets) liabilities	$	(3,412	)	$	(14,513	)
Amounts recognized in the consolidated balance sheets:
Deferred income tax assets (noncurrent)	$	3,412		$	16,636
Deferred income tax liabilities (noncurrent)	—			2,123
Net deferred income tax assets (liabilities)	$	3,412		$	14,513

A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2016, is shown below:



	Years Ended December 31,
(In thousands)	2018			2017			2016
Balance at beginning of period	$	1,962		$	3,315		$	4,049
Increase (decrease) due to tax positions taken in:
Current period	13			27			1,151
Prior period	1,430			(532		)	43
Increase (decrease) due to settlements with taxing authorities	—			(51		)	(1,706		)
Reductions due to lapse of statute of limitations	(44		)	(797		)	(222		)
Balance at end of period	$	3,361		$	1,962		$	3,315

Additional information related to unrecognized uncertain tax positions since January 1, 2016 is summarized below:



	Years Ended December 31,
(In thousands)	2018			2017			2016
Gross unrecognized tax benefits on uncertain tax positions (reflected in current income tax, other noncurrent liability accounts, or deferred tax assets in the balance sheet)	$	3,361		$	1,962		$	3,315
Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet)	(211		)	(153		)	(345		)
Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized	3,150			1,809			2,970
Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $107, $(1) and $(262) reflected in income tax expense in the income statement in 2018, 2017 and 2016, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet)	243			136			135
Related deferred income tax assets recognized on interest and penalties	(56		)	(32		)	(49		)
Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized	187			104			86
Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized	$	3,337		$	1,913		$	3,056