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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In 2021, 2020 and 2019, pre-tax income (loss) was attributed to the following jurisdictions:
| Year Ended December 31,
(In thousands) | 2021 |  | 2020 |  | 2019
Domestic operations | $ | (38,024) |  |  | $ | (15,711) |  |  | $ | (28,929) |
Foreign operations | 54,104 |  |  | 59,616 |  |  | 39,331 |
Total pre-tax income (loss) | $ | 16,080 |  |  | $ | 43,905 |  |  | $ | 10,402 |
The provision for income taxes charged to operations was as follows:
| Year Ended December 31,
(In thousands) | 2021 |  | 2020 |  | 2019
Current tax expense: |  |  |  |  |
U.S. federal | $ | 2 |  |  | $ | (193) |  |  | $ | (188) |
State and local | 75 |  |  | (54) |  |  | 82 |
Foreign | 12,386 |  |  | 6,525 |  |  | 8,217 |
Total current | 12,463 |  |  | 6,278 |  |  | 8,111 |
Deferred tax (benefit) expense: |  |  |  |  |
U.S. federal | 584 |  |  | — |  |  | — |
State and local | 90 |  |  | — |  |  | — |
Foreign | (2,358) |  |  | (945) |  |  | (1,339) |
Total deferred | (1,684) |  |  | (945) |  |  | (1,339) |
Total provision for income taxes | $ | 10,779 |  |  | $ | 5,333 |  |  | $ | 6,772 |
Net deferred tax assets were comprised of the following:
| December 31,
(In thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Accrued liabilities | $ | 6,483 |  |  | $ | — |
Amortization of intangible assets | 1,412 |  |  | 1,904 |
Capitalized inventory costs | 4,183 |  |  | 2,945 |
Depreciation | 4,289 |  |  | 2,530 |
Income tax credits | 17,513 |  |  | 15,558 |
Inventory reserves | 2,621 |  |  | 3,383 |
Net operating losses | 3,512 |  |  | 2,844 |
Operating lease obligations | 4,469 |  |  | 4,639 |
Stock-based compensation | 4,569 |  |  | 4,600 |
Other | 4,431 |  |  | 409 |
Total deferred tax assets | 53,482 |  |  | 38,812 |
Deferred tax liabilities: |  |  |
Accrued liabilities | — |  |  | (1,939) |
Accounts receivable | (10,919) |  |  | (710) |
Right of use assets | (4,690) |  |  | (4,577) |
Other | — |  |  | (29) |
Total deferred tax liabilities | (15,609) |  |  | (7,255) |
Net deferred tax assets before valuation allowance | 37,873 |  |  | 31,557 |
Less: Valuation allowance | (32,538) |  |  | (27,906) |
Net deferred tax assets | $ | 5,335 |  |  | $ | 3,651 |
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income from operations as a result of the following:
| Year Ended December 31,
(In thousands) | 2021 |  | 2020 |  | 2019
Tax provision at statutory U.S. rate | $ | 3,377 |  |  | $ | 9,220 |  |  | $ | 2,185 |
Increase (decrease) in tax provision resulting from: |  |  |  |  |
Federal research and development credits | (1,391) |  |  | (2,119) |  |  | (884) |
Foreign permanent benefit | (1,137) |  |  | (2,842) |  |  | (856) |
Foreign tax rate differential | (2,647) |  |  | (1,595) |  |  | (1,810) |
Foreign undistributed earnings, net of credits | 6,902 |  |  | 3,319 |  |  | 1,181 |
Liquidation of Cayman subsidiary | 745 |  |  | — |  |  | — |
Non-deductible items | 1,198 |  |  | 1,637 |  |  | 1,236 |
Non-territorial income | (2,993) |  |  | (2,493) |  |  | (1,806) |
Provision to return | (533) |  |  | (343) |  |  | 584 |
Sale of Argentina subsidiary | 2,084 |  |  | — |  |  | — |
State and local taxes, net | (1,435) |  |  | (1,932) |  |  | (1,903) |
Stock-based compensation | (616) |  |  | (266) |  |  | 262 |
Tax rate change | — |  |  | (1,527) |  |  | (412) |
Uncertain tax positions | — |  |  | (1,565) |  |  | (294) |
Valuation allowance | 4,632 |  |  | 3,109 |  |  | 7,524 |
Withholding tax | 2,333 |  |  | 2,320 |  |  | 1,082 |
Other | 260 |  |  | 410 |  |  | 683 |
Tax provision | $ | 10,779 |  |  | $ | 5,333 |  |  | $ | 6,772 |
At December 31, 2021, we had federal and state Research and Development ("R&D") income tax credit carryforwards of approximately $5.1 million and $12.2 million, respectively. The federal R&D income tax credits begin expiring in 2038. The state R&D income tax credits do not have an expiration date. At December 31, 2021, we had state and local net operating loss carryforwards of approximately $49.0 million. The state and local net operating loss carryforwards begin to expire in 2022. At December 31, 2021, we assessed the realizability of the Company's deferred tax assets by considering whether it is more likely than not 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. We considered taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. Due to cumulative operating losses for the three years ended in 2021, we have recorded a full valuation allowance against our U.S. federal and state deferred tax assets of $15.4 million and $17.2 million, respectively, as we have determined that it is more likely than not that the tax benefits will not be realized in the future. Additionally, as a result of the Argentina business sale we released the $0.3 million valuation allowance recorded as of December 31, 2020 against Argentina's net operating loss carryforward deferred tax assets. The valuation allowance increased by $4.6 million and $3.1 million during the years ended December 31, 2021 and 2020, respectively. We have an overall deferred tax liability for U.S. federal and state jurisdictions due to having indefinite lived deferred tax liabilities that cannot be used as a source of income to offset the deferred tax asset. Uncertain Tax Positions At December 31, 2021 and 2020, we had unrecognized tax benefits of approximately $3.0 million and $3.1 million, respectively, including interest and penalties. In accordance with accounting guidance, we have elected to classify interest and penalties as components of tax expense. Interest and penalties were immaterial for the year ended December 31, 2021 and 2020. Interest and penalties were $0.2 million for the year ended December 31, 2019. Interest and penalties are included in the unrecognized tax benefits. Changes to our gross unrecognized tax benefits were as follows:
| Year Ended December 31,
(In thousands) | 2021 |  | 2020 |  | 2019
Balance at beginning of period | $ | 3,020 |  |  | $ | 4,094 |  |  | $ | 4,040 |
Additions as a result of tax provisions taken during the current year | 226 |  |  | 274 |  |  | 473 |
Foreign currency translation | (13) |  |  | 20 |  |  | (100) |
Lapse in statute of limitations | — |  |  | (51) |  |  | (92) |
Settlements | (232) |  |  | — |  |  | (227) |
Other | — |  |  | (1,317) |  |  | — |
Balance at end of period | $ | 3,001 |  |  | $ | 3,020 |  |  | $ | 4,094 |
Approximately $3.0 million, $3.0 million and $4.3 million of the total amount of unrecognized tax benefits at December 31, 2021, 2020 and 2019, respectively, if not for the federal and state valuation allowance, would affect the annual effective tax rate, if recognized. We are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within the next twelve months. We do not anticipate a decrease in unrecognized tax benefits within the next twelve months based on federal, state, and foreign statute expirations in various jurisdictions. We have classified uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year. We file income tax returns in the U.S. jurisdiction and in various state and foreign jurisdictions. As of December 31, 2021, the open statutes of limitations for our significant tax jurisdictions are as follows: U.S. federal for 2018 through 2020, state and local for 2017 through 2020, and non-U.S. for 2015 through 2020. Indefinite Reinvestment Assertion Beginning in 2018, the Tax Act generally provides a 100% federal deduction for dividends received from foreign subsidiaries. Nevertheless, companies must still apply the guidance of ASC Topic 740 to account for the tax consequences of outside basis differences and other tax impacts of their investments in foreign subsidiaries, including potential foreign withholding taxes on distributions. For the years ended December 31, 2021, 2020 and 2019, we recorded a deferred tax liability of $0.9 million, $2.1 million and $1.7 million, respectively, relating to state tax and foreign tax withholding liabilities on future distributions. Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was signed into law. The CARES Act provides economic stimulus and relief to address the impact of the COVID-19 pandemic and includes provisions addressing the carryback of net operating losses for specific periods, refunds of alternative minimum tax credits, temporary modifications to limitations placed on the tax deductibility of net interest expenses, and technical amendments for qualified improvement property. Additionally, the CARES Act provides for refundable employee retention tax credits and the deferral of the employer-paid portion of Social Security taxes. For the years ended December 31, 2021 and 2020, respectively, the Company's income tax provision was not significantly impacted by the CARES Act. The Company will continue to closely monitor any effects from future legislation.

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- 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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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