XML 98 R24.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2019
INCOME TAXES |
INCOME TAXES | 13. INCOME TAXES ​ Tax Reform ​ The Tax Cuts and Jobs Act of 2017 (the “Tax Act” also commonly referred to as US tax reform), which was signed into law on December 22, 2017, has resulted in significant changes to the US corporate income tax system and the US Virgin Islands mirror code which replaces “United States” with “US Virgin Islands” throughout the Internal Revenue Code. The Tax Act transitions international taxation from a worldwide system to a modified territorial system and includes two base erosion prevention measures on non-US earnings, which has the effect of subjecting certain earnings of The Company’s foreign subsidiaries to US taxation as global intangible low taxed income (“GILTI”) and eliminates the deduction of certain payments made to related foreign corporations, and imposes a minimum tax if greater than regular tax under the base-erosion and anti-abuse tax (“BEAT”). These changes became effective beginning in 2018 but did not have an impact on us in the initial year. Based on The Company’s annual results for 2019 we are not calculating a GILTI inclusion for 2019. We do not believe we are subject to BEAT and therefore have not included any tax impacts of BEAT in The Company’s consolidated financial statements for the year ended December 31, 2019. ​ The components of income before income taxes for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |  | 2017 |
Domestic | ​ | $ | (15,661) | ​ | $ | 28,917 | ​ | $ | 25,232 | ​
Foreign | ​ |  | 21,733 | ​ |  | 24,825 | ​ |  | 22,321 | ​
Total | ​ | $ | 6,072 | ​ | $ | 53,742 | ​ | $ | 47,553 | ​
​ The following is a reconciliation from the tax computed at statutory income tax rates to the Company’s income tax expense for the years ended December 31, 2019, 2018, and 2017 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |  | 2017 |
Tax computed at statutory US federal income tax rates | ​ | $ | 1,275 | ​ | $ | 11,286 | ​ | $ | 16,644 | ​
Non-controlling interest | ​ | ​ | (648) | ​ | ​ | (1,114) | ​ | ​ | (2,887) | ​
Foreign tax rate differential | ​ | ​ | (1,820) | ​ | ​ | (2,716) | ​ | ​ | (6,621) | ​
Over (under) provided in prior periods | ​ |  | (244) | ​ |  | (4,683) | ​ |  | (18) | ​
Nondeductible expenses | ​ |  | 3,781 | ​ |  | 1,610 | ​ |  | 929 | ​
Capitalized transactions costs | ​ |  | 19 | ​ |  | 62 | ​ |  | 53 | ​
Change in tax reserves | ​ | ​ | 3,883 | ​ | ​ | 10,657 | ​ | ​ | 4,433 | ​
State Taxes, net of federal benefit | ​ |  | (429) | ​ |  | 1,674 | ​ |  | 1,075 | ​
Change in valuation allowance | ​ |  | (35) | ​ |  | 1,539 | ​ |  | 6,137 | ​
Investment Tax Credit | ​ | ​ | (1,215) | ​ | ​ | — | ​ | ​ | — | ​
Refund Claim for Domestic Production Deduction | ​ | ​ | — | ​ | ​ | 235 | ​ | ​ | (3,382) | ​
Tax Cuts and Jobs Act of 2017 | ​ | ​ | — | ​ | ​ | (148) | ​ | ​ | (10,639) | ​
Capital loss | ​ | ​ | — | ​ | ​ | 15 | ​ | ​ | (6,990) | ​
Deferred income tax revaluation | ​ | ​ | (513) | ​ | ​ | — | ​ | ​ | — | ​
Other, net | ​ | ​ | 51 | ​ | ​ | 453 | ​ | ​ | (75) | ​
Total Income Tax Expense | ​ | $ | 4,105 | ​ | $ | 18,870 | ​ | $ | (1,341) | ​
​ The components of income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):
\ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |  | 2017 | ​
Current: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States—Federal | ​ | $ | (1,559) | ​ | $ | 24,546 | ​ | $ | 375 | ​
United States—State | ​ |  | (336) | ​ |  | 4,506 | ​ |  | 500 | ​
Foreign | ​ |  | 8,192 | ​ |  | 13,060 | ​ |  | 11,289 | ​
Total current income tax expense | ​ | $ | 6,297 | ​ | $ | 42,112 | ​ | $ | 12,164 | ​
Deferred: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States—Federal | ​ | $ | (1,805) | ​ | $ | (17,947) | ​ | $ | (10,892) | ​
United States—State | ​ |  | (93) | ​ |  | (2,832) | ​ |  | 950 | ​
Foreign | ​ |  | (294) | ​ |  | (2,463) | ​ |  | (3,563) | ​
Total deferred income tax expense (benefit) | ​ | $ | (2,192) | ​ | $ | (23,242) | ​ | $ | (13,505) | ​
Consolidated: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States—Federal | ​ | $ | (3,364) | ​ | $ | 6,599 | ​ | $ | (10,517) | ​
United States—State | ​ |  | (429) | ​ |  | 1,674 | ​ |  | 1,450 | ​
Foreign | ​ |  | 7,898 | ​ |  | 10,597 | ​ |  | 7,726 | ​
Total income tax expense (benefit) | ​ | $ | 4,105 | ​ | $ | 18,870 | ​ | $ | (1,341) | ​
​ The significant components of deferred tax assets and liabilities are as follows as of December 31, 2019 and 2018 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |
Deferred tax assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Receivables reserve | ​ | $ | 1,192 | ​ | $ | 3,087 | ​
Temporary differences not currently deductible for tax | ​ |  | 13,144 | ​ |  | 9,035 | ​
Deferred compensation | ​ |  | 760 | ​ |  | 784 | ​
Operating lease liability | ​ |  | 15,869 | ​ |  | — | ​
Pension | ​ |  | 515 | ​ |  | 635 | ​
Net operating losses | ​ |  | 40,492 | ​ |  | 29,496 | ​
Tax Credits | ​ | ​ | 1,511 | ​ | ​ | 645 | ​
Total deferred tax asset | ​ |  | 73,483 | ​ |  | 43,682 | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Property, plant and equipment, net | ​ | ​ | 15,892 | ​ | ​ | 14,608 | ​
Right-of-use asset | ​ | ​ | 15,869 | ​ | ​ | — | ​
Intangible assets, net | ​ |  | 8,414 | ​ |  | 5,959 | ​
Total deferred tax liabilities | ​ |  | 40,175 | ​ |  | 20,567 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Valuation allowance | ​ |  | (39,406) | ​ |  | (31,442) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax liabilities | ​ | $ | (6,098) | ​ | $ | (8,327) | ​
​ Deferred tax assets and liabilities are reflected in the accompanying consolidated balance sheets as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |
Deferred tax assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current | ​ | $ | — | ​ | $ | — | ​
Long term | ​ |  | 2,582 | ​ |  | 1,949 | ​
Total deferred tax asset | ​ | $ | 2,582 | ​ | $ | 1,949 | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current | ​ | $ | — | ​ | $ | — | ​
Long term | ​ |  | (8,680) | ​ |  | (10,276) | ​
Total deferred tax liabilities | ​ | $ | (8,680) | ​ | $ | (10,276) | ​
Net deferred tax liabilities | ​ | $ | (6,098) | ​ | $ | (8,327) | ​
​ The Company’s effective tax rate for the years ended December 31, 2019 and 2018 was 67.6% and 35.1%, respectively. The effective tax rate for the year ended December 31, 2019 was primarily impacted by the following items: (i) a $3.9 million net increase of unrecognized tax positions, (ii) a $3.8 million net increase for permanently non-deductible expenses, (iii) a $1.2 million deferred tax benefit related to an investment tax credit, and (vi) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the US Virgin Islands and India. ​ The effective tax rate for the year ended December 31, 2018 was primarily impacted by the following items: (i) a $10.6 million net increase of unrecognized tax positions, (ii) a $4.7 million net benefit to record a return to accrual adjustment, (iii) a $1.2 million benefit to recognize a capital loss carryover due to capital gains on sale of wireless licenses, (iv) a $1.4 million net benefit to record a valuation allowance release on an indefinite lived intangible asset, (v) a $1.7 million provision associated with the intercompany sale of assets from the US to the US Virgin Islands, and (vi) the mix of income generated among the jurisdictions in which we operate along with the exclusion of losses in jurisdictions where we cannot benefit from those losses as required by ASC 740-270-30-36(a), primarily in the US Virgin Islands and India. ​ As of December 31, 2019, the Company estimated that it had gross federal, state and foreign net operating loss (“NOL”) carryforwards of $7.3 million, $6.1 million and $160.2 million respectively. Of these, $81.3 million will expire between 2025 and 2040 and $92.3 million may be carried forward indefinitely. ​ The Company assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. A significant piece of negative evidence evaluated is cumulative losses incurred in certain reporting jurisdictions over the three-year period ended December 31, 2019. Other negative evidence examined includes, but is not limited to, losses expected in early future years, a history of tax benefits expiring unused, uncertainties whose unfavorable resolution would adversely affect future results, and brief carryback, carry forward periods. On the basis of this evaluation, the Company believed it was more likely than not that the benefit from some of these federal, state, and foreign deferred taxes would not be realized. ​ In recognition of this risk at December 31, 2019 the Company has provided a valuation allowance against certain domestic and foreign deferred tax assets of $39.4 million. The valuation allowance primarily relates to foreign net operating losses, with the remaining amount applicable to other net deferred tax assets which the Company does not expect to be able to realize. ​ As of December 31, 2019, the Company had an estimated $129 million of undistributed earnings attributable to foreign subsidiaries for which no provision for state income taxes or foreign withholding taxes have been made because it is expected that such earnings will be reinvested outside the U.S. indefinitely unless repatriation can be done substantially tax-free. The Company will generally be free of additional U.S. federal tax consequences on distributed foreign subsidiary earnings due to a dividends received deduction implemented as part of the Tax Act for earnings distributed after January 1, 2018. Additionally, due to the one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings, the majority of previously unremitted earnings have already been subjected to U.S. federal income tax. The Company continues to assert indefinite reinvestment on outside basis differences in our non-U.S. subsidiaries, additionally any determination of the amount of the unrecognized deferred tax liability on outside basis differences is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios and the variation due to multiple potential assumptions relating to the timing of any future repatriation. ​ The Company had unrecognized tax benefits (including interest and penalty) of $38.6 million as of December 31, 2019, $34.7 million as of December 31, 2018 and, $24.1 million as of December 31, 2017. The net increase of the reserve during the year ended December 31, 2019 was attributable to an increase in tax positions for prior periods of $2.0 million, a net increase in tax positions for the current period of $3.4 million and partially offset by a lapse in statute of a prior year position of $1.5 million. The following shows the activity related to unrecognized tax benefits (not including interest and penalty) during the three years ended December 31, 2019 (in thousands): ​
​ | ​ | ​ | ​ | ​
Gross unrecognized tax benefits at December 31, 2016 |  | $ | 17,904 | ​
Increase in unrecognized tax benefits taken during a prior period | ​ | ​ | — | ​
Increase in unrecognized tax benefits taken during the current period | ​ | ​ | 3,394 | ​
Lapse in statute of limitations | ​ | ​ | (2) | ​
Settlements | ​ | ​ | (335) | ​
Gross unrecognized uncertain tax benefits at December 31, 2017 |  | ​ | 20,961 | ​
Increase in unrecognized tax benefits taken during a prior period | ​ | ​ | 7,293 | ​
Increase in unrecognized tax benefits taken during the current period |  | ​ | 3,408 | ​
Lapse in statute of limitations |  | ​ | (1,430) | ​
Settlements | ​ | ​ | — | ​
Gross unrecognized uncertain tax benefits at December 31, 2018 | ​ | ​ | 30,232 | ​
Increase in unrecognized tax benefits taken during a prior period | ​ | ​ | — | ​
Increase in unrecognized tax benefits taken during the current period |  | ​ | 3,383 | ​
Lapse in statute of limitations |  | ​ | (933) | ​
Settlements | ​ | ​ | — | ​
Gross unrecognized uncertain tax benefits at December 31, 2019 | ​ | $ | 32,682 | ​
​ The Company’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties are $5.9 million as of December 31, 2019, $4.5 million as of December 31, 2018, and $3.1 million as of December 31, 2017. ​ All $38.6 million of gross unrecognized uncertain tax benefits (including interest and penalty) would impact the effective tax rate if recognized. ​ The Company and its subsidiaries file income tax returns in the US and in various, state and local and foreign jurisdictions. The statute of limitations related to the consolidated US federal income tax return is closed for all tax years up to and including 2015. The federal tax audits are closed through 2014. The expiration of the statute of limitations related to the various state and foreign income tax returns that the Company and subsidiaries file varies by jurisdiction.

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