XML 37 R21.htm IDEA: XBRL DOCUMENT
v3.20.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income before income taxes and equity in earnings are as follows:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Domestic | $ | 18,012 |  |  | $ | (21,311) |  |  | $ | 5,455 |
Foreign | (12,463) |  |  | (22,462) |  |  | (4,946) |
Total income (loss) before income taxes and equity in earnings | $ | 5,549 |  |  | $ | (43,773) |  |  | $ | 509 |
The provision for income taxes (before equity in earnings) consists of:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Current: |  |  |  |  |
Federal | $ | 8,522 |  |  | $ | 906 |  |  | $ | 775 |
State and local | 2,540 |  |  | 884 |  |  | 351 |
Foreign | 665 |  |  | 392 |  |  | (323) |
Deferred | (1,861) |  |  | (1,073) |  |  | 2,086 |
Income tax provision | $ | 9,866 |  |  | $ | 1,109 |  |  | $ | 2,889 |
On March 27, 2020, H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into legislation which includes business tax provisions that impact taxes related to 2018, 2019 and 2020. Some of the significant tax law changes in accordance with the CARES Act are to increase the limitation on deductible business interest expense for 2019 and 2020, allow for the five-year carryback of net operating losses for 2018-2020, suspend the 80% limitation of taxable income for net operating loss carryforwards for 2018-2020, and accelerate the ability to claim refunds of Alternative Minimum Tax (“AMT”) credit carryforwards. The CARES Act remedied certain aspects of the Tax Act such as accelerated depreciation recovery for assets defined as qualified improvement property and carryback of operating losses to fiscal tax years. The latter required carryback of Filament losses to pre-acquisition fiscal years ended March 31, 2017 and March 31, 2016, which resulted in a tax expense that exceeded the benefit received from the various CARES Act provisions claimed by the Company. The Company received a tax refund of $2.3 million in the third quarter of 2020. On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted. The Tax Act revises the U.S. corporate income tax by, among other things, lowering the corporate income tax rate from 35% to 21%, adopting a quasi-territorial income tax system, imposing a one-time transition tax on foreign unremitted earnings, and setting limitations on the deductibility of certain costs (e.g., interest expense). For the year ended December 31, 2017, the Company accrued $0.3 million of tax expense for the Tax Act’s one-time transition tax on the Company’s material wholly owned foreign subsidiaries’ accumulated, unremitted earnings and $3.0 million in provisional expense related to the net change in deferred tax assets stemming from the Tax Act’s reduction of the U.S. federal tax rate from 35% to 21%. As of December 31, 2018, the Company had completed the accounting for the effects of the Act. The Company had included the impact of the Act on its annual effective tax rate and has recorded an additional provision of $0.7 million primarily related to an adjustment to the estimated transition tax liability, including an uncertain tax position. Since January 1, 2018, the Tax Act has subjected the Company to a tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries, base erosion anti-abuse tax (“BEAT”), foreign derived intangible income tax (“FDII”), and IRC Section 163(j) interest limitation (“Interest Limitation”). Entities can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company had elected to account for the GILTI tax as a current period expense. The Company did not have GILTI liability and was not subject to BEAT in 2020 and 2019. The tax impact of FDII was immaterial for 2020 and 2019. The Company was not subject to an interest limitation in 2020 and 2019, due to the favorable provisions provided under the CARES Act. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax assets and (liabilities) are as follows:
| December 31,
| 2020 |  | 2019
| (in thousands)
Deferred income tax assets: |  |  |
Operating lease liabilities | $ | 27,502 |  |  | $ | 29,126 |
Stock options | 2,178 |  |  | 2,660 |
Inventory | 2,438 |  |  | 2,351 |
Operating loss carryforwards | 9,894 |  |  | 8,041 |
Accounts receivable allowances | 1,461 |  |  | 777 |
Accrued compensation | 1,839 |  |  | 846 |
Deferred compensation | 1,310 |  |  | 1,123 |
Other | 3,061 |  |  | 911 |
Total deferred income tax assets | $ | 49,683 |  |  | $ | 45,835 |
Deferred income tax liabilities: |  |  |
Operating lease right-of-use assets | $ | (23,127) |  |  | $ | (25,084) |
Fixed assets | (1,920) |  |  | (2,431) |
Intangibles | (28,447) |  |  | (27,782) |
Total deferred income tax liabilities | (53,494) |  |  | (55,297) |
Net deferred income tax liability | (3,811) |  |  | (9,462) |
Valuation allowance | (6,903) |  |  | (4,223) |
Net deferred income tax liability | $ | (10,714) |  |  | $ | (13,685) |
The Company has capital loss carryforwards of $7.7 million in foreign jurisdictions and $1.0 million in the U.S. federal jurisdiction at December 31, 2020 that are offset entirely by a valuation allowance. The Company has net operating losses in foreign jurisdictions of $39.2 million and $11.8 million in state jurisdictions at December 31, 2020 that are offset entirely by a valuation allowance. The state net operating losses begin to expire in 2026. All U.S. federal losses have been carried back as a result of the CARES Act and no carryforwards remain. The provision for income taxes (before equity in earnings) differs from the amounts computed by applying the applicable federal statutory rates as follows:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Federal income taxes at the statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increases (decreases): |  |  |  |  |
State and local income taxes, net of Federal income tax benefit | 38.9 |  |  | (1.7) |  |  | 97.4 |
Foreign rate differences | (43.9) |  |  | 2.1 |  |  | (76.1) |
Impairment of goodwill (1) | 65.5 |  |  | (20.8) |  |  | 98.6 |
Non-deductible expenses | 16.4 |  |  | (1.2) |  |  | 129.9 |
Tax Act- revaluation of net deferred tax assets and other | — |  |  | — |  |  | 16.8 |
Tax Act- transition tax | — |  |  | — |  |  | 43.0 |
Uncertain tax positions | 4.0 |  |  | (0.3) |  |  | 302.8 |
Research and development credit | (7.2) |  |  | 1.4 |  |  | (18.5) |
Federal return to provision | 6.8 |  |  | 0.4 |  |  | (27.5) |
Loss of Filament pre-acquisition attributes due to CARES Act | 8.6 |  |  | — |  |  | — |
Equity-based compensation | 19.4 |  |  | — |  |  | — |
Valuation Allowance | 48.3 |  |  | (3.1) |  |  | (34.2) |
Other | — |  |  | (0.3) |  |  | 14.4 |
Provision for income taxes | 177.8 | % |  | (2.5) | % |  | 567.6 | %
(1)In 2019, the rate for the impairment of goodwill was (20.8)% due to a pretax loss position. The estimated values of the Company’s gross uncertain tax positions at December 31, 2020, 2019 and 2018 are liabilities of $1.6 million, $1.5 million and $2.0 million, respectively, and consist of the following:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Balance at January 1 | $ | (1,508) |  |  | $ | (1,975) |  |  | $ | (161) |
Additions based on tax positions related to the current year | (149) |  |  | (29) |  |  | (626) |
Additions based on tax positions related to the prior year | — |  |  | — |  |  | (1,302) |
Reductions for tax position of prior years | 9 |  |  | 496 |  |  | 114 |
Balance at December 31 | $ | (1,648) |  |  | $ | (1,508) |  |  | $ | (1,975) |
The Company had approximately $0.1 million and $0.1 million, net of federal and state tax benefit, accrued at December 31, 2020 and 2019, respectively, for the payment of interest. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes. If the Company’s tax positions are ultimately sustained, the Company’s liability, including interest, would be reduced by $2.0 million, all of which would impact the Company’s tax provision. On a quarterly basis, the Company evaluates its tax positions and revises its estimates accordingly. The Company believes that it is reasonably possible that none of its tax positions will be resolved within the next twelve months. The Company is no longer subject to U.S. Federal income tax examinations for the years prior to 2017. The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California, Georgia, Illinois, Massachusetts, New Jersey, New York and the United Kingdom. At December 31, 2020, the periods subject to examination by the Company’s major state jurisdictions, except for New York State, are generally for the years ended 2016 through 2019. In certain jurisdictions Filament may have additional periods subject to examination. The Company’s 2015 U.S. Federal income tax return audit was completed as of June 30, 2020 with no assessments. The Company's New York State tax returns for years 2015-2016 remain under audit with no material assessments as of December 31, 2020.

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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration