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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2016
Provision for Income Tax | Provision for income taxes reflected in the accompanying consolidated statements of operations are comprised of the following (in thousands):
|  | 2014 |  |  | 2015 |  |  | 2016 |
Federal |  | $ | (4 | ) |  | $ | — |  |  | $ | 1,549 |
State and local |  |  | 287 |  |  |  | 708 |  |  |  | 652 |
Foreign |  |  | 3,887 |  |  |  | 3,044 |  |  |  | 1,637 |
Total Current |  |  | 4,170 |  |  |  | 3,752 |  |  |  | 3,838 |
APIC |  |  | (84 | ) |  |  | — |  |  |  | 548 |
Deferred |  |  | (371 | ) |  |  | (329 | ) |  |  | (259 | )
Total |  | $ | 3,715 |  |  | $ | 3,423 |  |  | $ | 4,127 |
Components of Deferred Tax Assets (Liabilities) | The components of deferred tax assets/(liabilities) are as follows (in thousands):
|  | 2015 |  |  | 2016 |
Net deferred tax assets/(liabilities): |  |  |  |  |  |
Reserve for sales allowances and possible losses |  | $ | 756 |  |  | $ | 801 |
Accrued expenses |  |  | 1,193 |  |  |  | 1,739 |
Prepaid royalties |  |  | 13,155 |  |  |  | 16,806 |
Accrued royalties |  |  | 3,963 |  |  |  | 2,638 |
Inventory |  |  | 3,315 |  |  |  | 3,506 |
State income taxes |  |  | ― |  |  |  | 98 |
Property and equipment |  |  | 3,833 |  |  |  | 4,997 |
Original issue discount interest |  |  | (10,332 | ) |  |  | (6,945 | )
Goodwill and intangibles |  |  | 35,086 |  |  |  | 29,378 |
Share based compensation |  |  | 2,359 |  |  |  | 1,607 |
Undistributed foreign earnings |  |  | ― |  |  |  | (48,731 | )
Federal and state net operating loss carryforwards |  |  | 34,684 |  |  |  | 22,755 |
Credit carryforwards |  |  | 13,254 |  |  |  | 21,097 |
Other |  |  | (2,621 | ) |  |  | (2,495 | )
Gross |  |  | 98,645 |  |  |  | 47,251 |
Valuation allowance |  |  | (100,938 | ) |  |  | (49,285 | )
Total net deferred tax assets/(liabilities) |  | $ | (2,293 | ) |  | $ | (2,034 | )
Significant Differences in Tax at Statutory and Effective Rates | Provision for income taxes varies from the U.S. federal statutory rate. The following reconciliation shows the significant differences in the tax at statutory and effective rates:
|  | 2014 |  |  | 2015 |  |  | 2016 |
Federal income tax expense |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income tax expense, net of federal tax effect |  |  | ― |  |  |  | 1.0 |  |  |  | (3.6 | )
Effect of differences in U.S. and foreign statutory rates |  |  | (14.1 | ) |  |  | (9.4 | ) |  |  | (53.7 | )
Uncertain tax positions |  |  | ― |  |  |  | 0.3 |  |  |  | 3.4 |
Earn-out adjustments |  |  | ― |  |  |  | (7.4 | ) |  |  | ― |
Provision to return |  |  | ― |  |  |  | 12.2 |  |  |  | 4.5 |
Non-deductible expenses |  |  | 1.1 |  |  |  | 1.1 |  |  |  | 8.9 |
Other |  |  | (1.5 | ) |  |  | 0.5 |  |  |  | 0.6 |
Foreign deemed dividend |  |  | ― |  |  |  | 1.7 |  |  |  | 262.2 |
Foreign tax credit |  |  | ― |  |  |  | (0.5 | ) |  |  | (126.1 | )
Undistributed foreign earnings |  |  | ― |  |  |  | ― |  |  |  | 906.5 |
Valuation allowance |  |  | (5.8 | ) |  |  | (21.6 | ) |  |  | (960.9 | )
|  |  | 14.7 | % |  |  | 12.9 | % |  |  | 76.8 | %
Income (Loss) Before Provision for Income Tax | The components of income (loss) before provision for income taxes are as follows (in thousands):
|  | 2014 |  |  | 2015 |  |  | 2016 |
Domestic |  | $ | 5,358 |  |  | $ | 11,692 |  |  | $ | (7,760 | )
Foreign |  |  | 19,866 |  |  |  | 14,901 |  |  |  | 13,136 |
|  | $ | 25,224 |  |  | $ | 26,593 |  |  | $ | 5,376 |
Effective Tax Rate | The following table provides further information of UTPs that would affect the effective tax rate, if recognized, as of December 31, 2016 (in millions):
Balance, January 1, 2014 |  | $ | 2.6 |
Current year additions |  |  | — |
Current year reduction due to lapse of applicable statute of limitations |  |  | (0.1 | )
Balance, December 31, 2014 |  |  | 2.5 |
Current year additions |  |  | 1.8 |
Current year reduction due to lapse of applicable statute of limitations |  |  | (2.1 | )
Balance, December 31, 2015 |  |  | 2.2 |
Current year additions |  |  | 0.1 |
Current year reduction due to audit settlement |  |  | — |
Balance, December 31, 2016 |  | $ | 2.3 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: 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=65882285&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: 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=65882285&loc=d3e32537-109319 + Details
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- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32687-109319 + Details
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- Definition Tabular disclosure of income before income tax between domestic and foreign jurisdictions. + 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)(1)(i)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 + Details
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- Definition Tabular disclosure of the change in unrecognized tax benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 55 -Paragraph 217 -URI http://asc.fasb.org/extlink&oid=75116239&loc=d3e36027-109320 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=65882285&loc=SL6600010-109319 + Details
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