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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes [Abstract] |
Income Taxes | ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ 5. Income Taxes ﻿ The income tax expense (benefit) included in the accompanying consolidated statement of operations represents federal, state and foreign income taxes. The components of income (loss) before income taxes and the provision for income taxes consist of the following: ﻿
﻿ |  |  |  |  |  |
Years ended December 31 |  | 2016 |  | 2015 |  | 2014
Income (loss) before income taxes: |  |  |  |  |  |
﻿Domestic | $ | 35,088 | $ | 22,959 | $ | 1,635
﻿Foreign |  | 4,097 |  | (2,729) |  | (54,695)
﻿Total income (loss) before income taxes | $ | 39,185 | $ | 20,230 | $ | (53,060)
Provision for income taxes: |  |  |  |  |  |
Current: |  |  |  |  |  |
﻿Federal | $ | 760 | $ | 386 | $ | -
﻿State and foreign |  | 2,575 |  | 1,232 |  | 1,382
﻿Total current expense |  | 3,335 |  | 1,618 |  | 1,382
Deferred: |  |  |  |  |  |
﻿Federal |  | (37,828) |  | - |  | -
﻿ State and foreign |  | (1,896) |  | (2,165) |  | (3,238)
﻿Total deferred benefit |  | (39,724) |  | (2,165) |  | (3,238)
﻿Total income tax benefit | $ | (36,389) | $ | (547) | $ | (1,856)
﻿ ﻿ A reconciliation of the Company’s effective income tax rate to the statutory federal tax rate is as follows: ﻿
﻿ |  |  |  |  |  |  |
﻿Years ended December 31 |  | 2016 |  | 2015 |  | 2014 |
﻿Statutory U.S. federal income tax rate |  | 35.0 | % | 35.0 | % | (35.0) | %
﻿State income taxes, net of federal tax benefit |  | 1.9 |  | 0.2 |  | - |
﻿Tax credits |  | (0.8) |  | (2.8) |  | (1.3) |
﻿Foreign tax rate differential |  | (4.7) |  | (3.3) |  | 0.2 |
﻿Reduction (increase) of income tax accruals |  | 0.1 |  | (0.5) |  | 0.2 |
﻿Tax on foreign dividends, net of foreign tax credits |  | - |  | - |  | (0.1) |
﻿Reduction (increase) of deferred taxes |  | (1.3) |  | 5.5 |  | - |
﻿Valuation allowances |  | (121.6) |  | (36.0) |  | (2.1) |
﻿Loss of domestic flow-through entity not attributable to Stoneridge, Inc. |  | - |  | - |  | 33.9 |
﻿Non-deductible compensation |  | - |  | (1.5) |  | 1.0 |
﻿Other |  | (1.4) |  | 0.7 |  | (0.3) |
﻿Effective income tax rate |  | (92.8) | % | (2.7) | % | (3.5) | %
﻿ The Company recognized income tax expense (benefit) of $(36,389) or (92.8)%, $(547) or (2.7)% and $(1,856) or (3.5)% of income (loss) before income taxes for federal, state and foreign income taxes for the years ended December 31, 2016, 2015 and 2014, respectively. The increase in tax benefit for the year ended December 31, 2016 compared to the same period for 2015 was predominantly due to the release of the U.S. federal, certain state and foreign valuation allowances that were previously recorded against certain deferred tax assets. The decrease in tax benefit for the year ended December 31, 2015 compared to the same period for 2014 was predominantly due to the recording a valuation allowance against the PST’s Brazilian deferred tax assets. The increase in the effective tax rate to (2.7)% in 201 5 from (3.5)% in 201 4 was primarily due to providing a valuation allowance in 2015 with respect to the Brazilian deferred tax assets related to PST. The impact on the effective tax rate due to the PST valuation allowance was offset by the impact of the improvement in the performance of the U.S. operations, which do not attract tax due to the full valuation allowance, and the prior year impact of the nondeductible goodwill impairment in 2014 that did not impact the effective tax rate for 2015. ﻿ The Company has not recorded deferred income taxes on the undistributed earnings of its foreign subsidiaries because of management’s intent and ability to indefinitely reinvest such earnings. At December 31, 2016 the aggregate undistributed earnings of our foreign subsidiaries amounted to $44,898. The Company may be subject to U.S. income taxes and foreign withholding taxes if these earnings were distributed. It is not practicable to estimate the amount of taxes, if any, that may be payable on these earnings as that estimate depends upon circumstances that would exist at the time a remittance occurs. ﻿ Significant components of the Company’s deferred tax assets and liabilities were as follows: ﻿
﻿ |  |  |  |
As of December 31 |  | 2016 |  | 2015
Deferred tax assets: |  |  |  |
﻿Inventories | $ | 2,156 | $ | 2,108
﻿Employee compensation and benefits |  | 4,785 |  | 3,902
﻿Insurance |  | 245 |  | 281
﻿Depreciation and amortization |  | 1,310 |  | 1,297
﻿Net operating loss carryforwards |  | 28,952 |  | 39,846
﻿General business credit carryforwards |  | 14,135 |  | 12,990
﻿Other reserves |  | 7,609 |  | 5,643
﻿Gross deferred tax assets |  | 59,192 |  | 66,067
﻿Less: Valuation allowance |  | (11,125) |  | (59,391)
﻿Deferred tax assets less valuation allowance |  | 48,067 |  | 6,676
﻿ |  |  |  |
Deferred tax liabilities: |  |  |  |
﻿Depreciation and amortization |  | (14,911) |  | (13,282)
﻿Basis difference - equity investee |  | (31,016) |  | (31,016)
﻿Other |  | (1,358) |  | (1,074)
﻿Gross deferred tax liabilities |  | (47,285) |  | (45,372)
﻿ |  |  |  |
﻿Net deferred tax asset (liability) | $ | 782 | $ | (38,696)
﻿ The balance sheet classification of our net deferred tax asset is shown below: ﻿ ﻿
﻿ |  |  |  |
﻿Years ended December 31 |  | 2016 |  | 2015
﻿ |  |  |  |
﻿Current deferred income tax assets |  | - |  | 1,239
﻿Current deferred income tax liabilities |  | - |  | (39)
﻿Long-term deferred income tax assets |  | 10,542 |  | 1,436
﻿Long-term deferred income tax liabilities |  | (9,760) |  | (41,332)
﻿Net deferred tax asset | $ | 782 | $ | (38,696)
﻿ The Company adopted ASU 2015-17 in 2016. As such, all deferred tax assets and liabilities are classified as long-term at December 31, 2016. ﻿ Based on the Company’s review of both positive and negative evidence regarding the continuation of the tax valuation allowance at December 31, 2015 and 2014, a valuat ion allowance the U.S. federal, certain state and foreign deferred tax assets continued to be recorded based upon the conclusion that it was more likely than not they would not be realized before they expired. ﻿ The financial results for the U.S. operation improved significantly in 2016 due to the earnings growth of Control Devices segment as well as a significant reduction in interest expense as a re sult of the Company’s refinancing activities in the f all of 201 4. The U.S. operation is in a three year cumulative income position at December 31, 2016. Based on the available positive and negative evidence and the weight accorded to that evidence at December 31, 2016, the Company has determined that the significant positive evidence outweighed the negative evidence. Therefore, the Company has concluded that it is more likely than not that the U.S. federal deferred tax assets will be realized (including those that carry expiration dates) and accordingly will no longer provide a valuation allowance against its domestic deferred tax assets. In addition, the Company concluded that it is more likely than not that the certain state and foreign, deferred tax assets will be realized, and as such the previously provided valuation allowances were re leased. The total U.S. valuation allowance remaining represents the amount of tax benefit related to certain state and certain foreign net operating losses, credits and other deferred tax assets that are not expected to be realized at December 31, 2016. ﻿ Based on a review of objective positive and negative evidence at December 31, 2016 and 2015, the Company co ncluded that it was more likely than not that the deferred tax assets of PST w ould not be realized. As a result the Company provided a valuation allowance, net of certain future reversing taxable temporary differences, with respect to PST’s deferred tax assets. The total valuation allowance at December 31, 2015 represents the amount of tax benefit related to PST’s net operating losses, credits and other deferred tax assets that are not expected to be realized. ﻿ The Company has net operating loss carry forwards of $53,064, $41,222 and $35,849 for U.S. federal, state and foreign tax jurisdictions, respectively. The U.S. federal net operating losses, if unused, begin to expire in 2026, the state net operating losses expire at various times and the foreign net operating losses expire at various times or have indefinite expiration dates. The Company has general business and foreign tax credit carry forwards of $15,254, $1,530 a nd $1,510 for U.S. federal, state and foreign jurisdictions respectively. The U.S. federal general business credits, if unused, begin to expire in 2021, and the state and foreign tax credits expire at various times. ﻿ The Company is required to provide a deferred tax liability corresponding to the difference between the financial reporting basis (which was remeasured to fair value upon the acquisition of an additional 24% of PST in 2011) and the tax basis in the previously held 50% ownership interest in PST (the “outside” basis difference). This outside basis difference will generally remain fixed until (1) dividends from the subsidiary exceed the parent’s share of earnings subsequent to the date it became a subsidiary or (2) there is a transaction that affects the Company’s ownership of PST. ﻿ The following is a reconciliation of the Company’s total gross unrecognized tax benefits: ﻿ ﻿
﻿ |  |  |  |  |  |
﻿ |  | 2016 |  | 2015 |  | 2014
﻿Balance as of January 1 | $ | 4,304 | $ | 3,888 | $ | 3,624
﻿ |  |  |  |  |  |
﻿Tax positions related to the current year: |  |  |  |  |  |
﻿Additions |  | 208 |  | 201 |  | 217
﻿Tax positions related to the prior years: |  |  |  |  |  |
﻿Additions |  | - |  | 523 |  | 168
﻿Reductions |  | (61) |  | - |  | -
﻿Expirations of statutes of limitation |  | (612) |  | (308) |  | (121)
﻿ |  |  |  |  |  |
﻿Balance as of December 31 | $ | 3,839 | $ | 4,304 | $ | 3,888
﻿ At December 31, 2016, the Company has classified $146 as a noncurrent liability and $3,731 as a reduction to non-current deferred income tax assets. The amount of unrecognized tax benefits is not expected to change significantly during the next 12 months. Management is currently unaware of issues under review that could result in a significant change or a material deviation in this estimate. If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, the amount that would affect the Company’s effective tax rate is approximately $3,821 and $4,280 at December 31, 2016 and 2015, respectively. ﻿ T he Company classifies interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of income tax expense (benefit). For the years ended December 31, 2016, 2015 and 2014, the C ompany recognized approximatel y $(59), $(90) and $(411) of gross interest and penalties, respectively. The Company has accrued approximately $64 and $123 for the payment of interest and penalties at December 31, 2016 and 2015, respectively. ﻿ The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. The following table summarizes the open tax years for each important jurisdiction: ﻿
﻿ |  |
﻿Jurisdiction | Open Tax Years
﻿U.S. Federal |  | 2013-2016
﻿Brazil |  | 2011-2016
﻿China |  | 2013-2016
﻿France |  | 2012-2016
﻿Mexico |  | 2012-2016
﻿Spain |  | 2012-2016
﻿Sweden |  | 2011-2016
﻿United Kingdom |  | 2012-2016
﻿

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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