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Income Taxes (Tables)

12 Months Ended

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

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-Name Accounting Standards Codification
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