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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Provision for Income Tax

Provision for income taxes reflected in the accompanying consolidated statements of operations are comprised of the following (in thousands):

		2015				2016				2017
Federal		$	—			$	1,549			$	550
State and local			708				652				51
Foreign			3,044				1,637				2,256
Total Current			3,752				3,838				2,857
APIC			—				548				—
Deferred			(329	)			(259	)			(1,251	)
Total		$	3,423			$	4,127			$	1,606

Components of Deferred Tax Assets (Liabilities)

The components of deferred tax assets/(liabilities) are as follows (in thousands):

		2016				2017
Net deferred tax assets/(liabilities):
Reserve for sales allowances and possible losses		$	801			$	611
Accrued expenses			1,739				1,375
Prepaid royalties			16,806				13,631
Accrued royalties			2,638				1,864
Inventory			3,506				6,146
State income taxes			98				26
Property and equipment			4,997				4,257
Original issue discount interest			(6,945	)			(2,131	)
Goodwill and intangibles			29,378				15,782
Share based compensation			1,607				578
Undistributed foreign earnings			(48,731	)			(2,524	)
Federal and state net operating loss carryforwards			22,755				14,091
Credit carryforwards			21,097				35,195
Other			(2,495	)			22
Gross			47,251				88,923
Valuation allowance			(49,285	)			(89,706	)
Total net deferred tax liabilities		$	(2,034	)		$	(783	)

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:

		2015				2016				2017
Federal income tax expense			35.0	%			35.0	%			35.0	%
State income tax expense, net of federal tax effect			1.0				(3.6	)			5.0
Effect of differences in U.S. and foreign statutory rates			(9.4	)			(53.7	)			1.9
Uncertain tax positions			0.3				3.4				―
Earn-out adjustments			(7.4	)			―				―
Provision to return			12.2				4.5				(0.7)
Non-deductible expenses			1.1				8.9				(48.0)
Other			0.5				0.6				(0.2)
Foreign deemed dividend			1.7				262.2				―
Foreign tax credit			(0.5	)			(126.1	)			20.3
Undistributed foreign earnings			―				906.5				57.3
Effect of change in federal statutory rate			―				―				(23.0)
Valuation allowance			(21.6	)			(960.9	)			(49.6	)
			12.9	%			76.8	%			(2.0)	%

Income (Loss) Before Provision for Income Tax

The components of income (loss) before provision for income taxes are as follows (in thousands):

		2015				2016				2017
Domestic		$	11,692			$	(7,760	)		$	(85,288	)
Foreign			14,901				13,136				3,866
		$	26,593			$	5,376			$	(81,422	)

Effective Tax Rate

The following table provides further information of UTPs that would affect the effective tax rate, if recognized, as of December 31, 2017 (in millions):

Balance, January 1, 2015		$	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 lapse of applicable statute of limitations			—
Balance, December 31, 2016			2.3
Current year additions			0.1
Current year reduction due to audit settlement			(1.1	)
Balance, December 31, 2017		$	1.3

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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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