XML 34 R16.htm IDEA: XBRL DOCUMENT
v3.19.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES For the years ended December 31, 2018, 2017 and 2016, our income tax benefit on the loss from continuing operations reflected an effective tax rate benefit of 33%, 39% and 20%, respectively. Our income tax benefit on continuing operations for the years ended December 31, 2018, 2017 and 2016 was $31.1 million, $53.1 million and $3.1 million, respectively, and includes federal, state and foreign taxes. The components of our tax benefit on continuing operations were as follows (in thousands):
| Current |  | Deferred |  | Total
Twelve months ended December 31, 2018: |  |  |  |  |
U.S. Federal | $ | (3,295 | ) |  | $ | (27,670 | ) |  | $ | (30,965 | )
State & local | 509 |  |  | (2,360 | ) |  | (1,851 | )
Foreign jurisdictions | 3,457 |  |  | (1,704 | ) |  | 1,753 |
| $ | 671 |  |  | $ | (31,734 | ) |  | $ | (31,063 | )
Twelve months ended December 31, 2017: |  |  |  |  |
U.S. Federal | $ | 6,177 |  |  | $ | (62,222 | ) |  | $ | (56,045 | )
State & local | 170 |  |  | (4,819 | ) |  | (4,649 | )
Foreign jurisdictions | 6,821 |  |  | 795 |  |  | 7,616 |
| $ | 13,168 |  |  | $ | (66,246 | ) |  | $ | (53,078 | )
Twelve months ended December 31, 2016: |  |  |  |  |
U.S. Federal | $ | (2,048 | ) |  | $ | (5,262 | ) |  | $ | (7,310 | )
State & local | (1,338 | ) |  | 206 |  |  | (1,132 | )
Foreign jurisdictions | 4,529 |  |  | 820 |  |  | 5,349 |
| $ | 1,143 |  |  | $ | (4,236 | ) |  | $ | (3,093 | )
The components of pre-tax income (loss) from continuing operations for the years ended December 31, 2018, 2017 and 2016 were as follows (in thousands):
| Twelve Months Ended December 31,
| 2018 |  | 2017 |  | 2016
Domestic | $ | (90,822 | ) |  | $ | (149,045 | ) |  | $ | (25,488 | )
Foreign | (3,387 | ) |  | 11,512 |  |  | 9,830 |
| $ | (94,209 | ) |  | $ | (137,533 | ) |  | $ | (15,658 | )
The income tax benefit attributable to the loss from continuing operations differed from the amounts computed by applying the U.S. Federal income tax rate (21% in 2018, 35% in 2017 and 2016) to pre-tax loss from continuing operations as a result of the following (in thousands):
| Twelve Months Ended December 31,
| 2018 |  | 2017 |  | 2016
Pre-tax loss from continuing operations | $ | (94,209 | ) |  | $ | (137,533 | ) |  | $ | (15,658 | )
Computed income taxes at statutory rate | (19,784 | ) |  | (48,136 | ) |  | (5,481 | )
State income taxes, net of federal benefit | (2,360 | ) |  | (4,709 | ) |  | (713 | )
Foreign tax rate differential | (52 | ) |  | (642 | ) |  | (707 | )
Deferred taxes on investment in foreign subsidiaries | (7,284 | ) |  | (17,079 | ) |  | 1,777 |
Non-deductible expenses | 686 |  |  | 1,030 |  |  | 871 |
Foreign tax credits | — |  |  | (17,445 | ) |  | (2,302 | )
Other tax credits | (1,995 | ) |  | (631 | ) |  | (1,033 | )
Deemed repatriation tax | (1,751 | ) |  | 24,374 |  |  | — |
Goodwill impairment | — |  |  | 19,442 |  |  | — |
Dividend from foreign subsidiaries | — |  |  | — |  |  | 2,021 |
Valuation allowance | 2,923 |  |  | 1,249 |  |  | 1,986 |
Rate change | 81 |  |  | (17,360 | ) |  | — |
Other | (1,527 | ) |  | 6,829 |  |  | 488 |
Total benefit for income tax on continuing operations | $ | (31,063 | ) |  | $ | (53,078 | ) |  | $ | (3,093 | )
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
| December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Accrued compensation and benefits | $ | 10,463 |  |  | $ | 9,810 |
Receivables | 3,096 |  |  | 2,381 |
Inventory | 422 |  |  | 873 |
Stock options | 1,101 |  |  | 738 |
Foreign currency translation and other equity adjustments | — |  |  | 2,945 |
Other accrued liabilities | 2,058 |  |  | 3,066 |
Tax credit carry forward | 1,920 |  |  | 2,588 |
Net operating loss carry forwards | 48,732 |  |  | 35,185 |
Other | 5,925 |  |  | 2,066 |
Deferred tax assets | 73,717 |  |  | 59,652 |
Less: Valuation allowance | (10,549 | ) |  | (6,479 | )
Deferred tax assets, net | 63,168 |  |  | 53,173 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | (22,429 | ) |  | (20,918 | )
Goodwill and intangible costs | (23,210 | ) |  | (27,762 | )
Unremitted earnings of foreign subsidiaries | (5,375 | ) |  | (13,795 | )
Convertible debt | (7,055 | ) |  | (3,622 | )
Other | (3,553 | ) |  | (677 | )
Deferred tax liabilities | (61,622 | ) |  | (66,774 | )
Net deferred tax asset (liability) | $ | 1,546 |  |  | $ | (13,601 | )
As of December 31, 2018, we had a valuation allowance of $10.5 million to reduce our deferred tax assets to an amount more likely than not to be recovered. This valuation allowance relates primarily to deferred tax assets on foreign and state net operating loss carry forwards. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At December 31, 2018, we had net operating loss carry forwards for U.S. federal income tax purposes of $132.3 million. Of this amount, $94.7 million expires in 2036 and 2037 and $37.6 million has an indefinite carry forward period. These carry forwards are available, subject to certain limitations, to offset future taxable income. Additionally, total federal net operating losses of $13.6 million will be carried back to prior years. Further, we have state net operating loss carry forwards of $92.0 million with $77.1 million expiring various dates through 2038 and $14.9 million with an indefinite carry forward period. In addition, as of December 31, 2018, we have an alternative minimum tax credit carry forwards of approximately $2.4 million which, under the 2017 Tax Act, can be used to offset regular income tax in future periods, or is refundable for any tax year beginning after 2017 and before 2022 in an amount equal to 50% (100% for tax years beginning in 2021). Also, at December 31, 2018, there are research and development credit carry forwards of $1.2 million. As of December 31, 2018, we had foreign net operating loss carry forwards totaling $41.1 million that were expected to be realized in the future periods. A total of $24.9 million has an unlimited carry forward period and will therefore not expire. At December 31, 2018, none of our undistributed earnings of foreign operations were considered to be permanently reinvested overseas. As of December 31, 2018, the deferred tax liability related to undistributed earnings of foreign subsidiaries was $5.4 million. At December 31, 2018, we have established liabilities for uncertain tax positions of $2.2 million, inclusive of interest and penalties. To the extent these uncertainties are ultimately resolved favorably, the resulting reduction of recorded liabilities would have an effect on our effective tax rate. In accordance with ASC 740-10, our policy is to recognize interest and penalties related to unrecognized tax benefits through the tax provision. We file income tax returns in the U.S. with federal and state jurisdictions as well as various foreign jurisdictions. With few exceptions, we are no longer subject to U.S. Federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2015. The IRS audits for the tax years ended May 31, 2015 and December 31, 2015 have been completed as of December 31, 2018, and the final audit adjustment recorded was not material. The income tax laws and regulations are voluminous and are often ambiguous. As such, we are required to make certain subjective assumptions and judgments regarding our tax positions that may have a material effect on our results of operations, financial position or cash flows. We believe, however, that there is appropriate support for the income tax positions taken, and to be taken, on our returns, and that our accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. Set forth below is a reconciliation of the changes in our unrecognized tax benefits associated with uncertain tax positions (in thousands):
| Twelve Months Ended December 31,
| 2018 |  | 2017 |  | 2016
Balance at beginning of year | $ | 1,159 |  |  | $ | 858 |  |  | $ | 539 |
Acquisition of Furmanite uncertain tax positions | — |  |  | — |  |  | 660 |
Additions based on current year tax positions | — |  |  | — |  |  | 464 |
Additions based on tax positions related to prior years | 1,478 |  |  | 301 |  |  | 96 |
Reductions based on tax positions related to prior years | (416 | ) |  | — |  |  | (564 | )
Settlements | — |  |  | — |  |  | (337 | )
Balance at end of year | $ | 2,221 |  |  | $ | 1,159 |  |  | $ | 858 |
The estimated amount of liabilities recorded for uncertain tax positions that we believe will be effectively settled within the next twelve months is immaterial. The 2017 Tax Act and SAB 118 Provisional Estimates On December 22, 2017, the U.S. government enacted the 2017 Tax Act, which significantly revised U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%, implementing a territorial tax system, imposing a one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs (e.g., interest expense), among other changes. Due to the complexities involved in accounting for the 2017 Tax Act, the SEC issued SAB 118, which requires that companies include in their financial statements estimates of the impact of the 2017 Tax Act to the extent such estimates have been determined. Accordingly, the Company recorded the following estimates of the tax impact of the new law in its statement of operations for the year ended December 31, 2017:
a) | The Company accrued an estimate of $8.4 million of tax benefit (net of applicable foreign tax credits) for the 2017 Tax Act’s one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings going back to 1986. The Company has elected to pay the transition tax in installments over the period of eight years, pursuant to the guidance of the new Internal Revenue Code Section 965, however in 2019 the Company will utilize available tax credits to fully offset remaining balance of the one-time transition tax liability.
b) | The Company accrued $17.4 million of provisional tax benefit related to the net change in deferred tax balances stemming from the 2017 Tax Act’s reduction of the U.S. federal income tax rate,
c) | The Company recorded an estimate of the state tax impact of the 2017 Tax Act, based on the current law in the states in the U.S. in which it operates, and
d) | The Company calculated an estimate of the effect on certain deferred tax assets and liabilities of the Company related to the 2017 Tax Act’s revised rules regarding certain incentive-based compensation tax deductions under Internal Revenue Code Section 162(m).
Pursuant to the SAB 118, the company was allowed a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. During the year ended December 31, 2018, the Company finalized the recording of the impacts of the 2017 Tax Act and recorded an income tax benefit of $1.8 million, reflecting an adjustment to the provisional estimate of the deemed repatriation transition tax. In 2019, we will amend the one-time transition tax to include tax credits to offset the remainder of the tax liability on the transition tax. As a result of the final calculation of the transition tax liability, the Company also recorded an adjustment to the deferred tax liability associated with investments in foreign subsidiaries. Effective January 1, 2018, the Company is subject to GILTI for earnings and profits of its foreign subsidiaries as well as BEAT for certain tax payments between a U.S. corporation and its subsidiaries. As of December 31, 2018, the Company had no tax liabilities relating to GILTI or BEAT tax.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration