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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In 2022, 2021 and 2020, pre-tax income (loss) was attributed to the following jurisdictions:
| Year Ended December 31,
(In thousands) | 2022 |  | 2021 |  | 2020
Domestic operations | $ | (69,058) |  |  | $ | (38,024) |  |  | $ | (15,711) |
Foreign operations | 80,451 |  |  | 54,104 |  |  | 59,616 |
Total pre-tax income (loss) | $ | 11,393 |  |  | $ | 16,080 |  |  | $ | 43,905 |
The provision for income taxes charged to operations was as follows:
| Year Ended December 31,
(In thousands) | 2022 |  | 2021 |  | 2020
Current tax expense: |  |  |  |  |
U.S. federal | $ | 573 |  |  | $ | 2 |  |  | $ | (193) |
State and local | 73 |  |  | 75 |  |  | (54) |
Foreign | 8,523 |  |  | 12,386 |  |  | 6,525 |
Total current | 9,169 |  |  | 12,463 |  |  | 6,278 |
Deferred tax (benefit) expense: |  |  |  |  |
U.S. federal | 230 |  |  | 584 |  |  | — |
State and local | 36 |  |  | 90 |  |  | — |
Foreign | 1,551 |  |  | (2,358) |  |  | (945) |
Total deferred | 1,817 |  |  | (1,684) |  |  | (945) |
Total provision for income taxes | $ | 10,986 |  |  | $ | 10,779 |  |  | $ | 5,333 |
Net deferred tax assets were comprised of the following:
| December 31,
(In thousands) | 2022 |  | 2021
Deferred tax assets: |  |  |
Accrued liabilities | $ | — |  |  | $ | 6,483 |
Accounts receivable | 5,657 |  |  | — |
Amortization of intangible assets | 5,977 |  |  | 1,412 |
Capitalized inventory costs | 5,060 |  |  | 4,183 |
Capitalized research & development costs | 4,632 |  |  | — |
Depreciation | 5,067 |  |  | 4,289 |
Income tax credits | 17,234 |  |  | 17,513 |
Inventory reserves | 2,258 |  |  | 2,621 |
Net operating losses | 3,770 |  |  | 3,512 |
Operating lease obligations | 4,212 |  |  | 4,469 |
Stock-based compensation | 4,288 |  |  | 4,569 |
Other | — |  |  | 4,431 |
Total deferred tax assets | 58,155 |  |  | 53,482 |
Deferred tax liabilities: |  |  |
Accrued liabilities | (5,273) |  |  | — |
Accounts receivable | — |  |  | (10,919) |
Right of use assets | (4,407) |  |  | (4,690) |
Other | (361) |  |  | — |
Total deferred tax liabilities | (10,041) |  |  | (15,609) |
Net deferred tax assets before valuation allowance | 48,114 |  |  | 37,873 |
Less: Valuation allowance | (44,596) |  |  | (32,538) |
Net deferred tax assets | $ | 3,518 |  |  | $ | 5,335 |
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) | 2022 |  | 2021 |  | 2020
Tax provision at statutory U.S. rate | $ | 2,392 |  |  | $ | 3,377 |  |  | $ | 9,220 |
Increase (decrease) in tax provision resulting from: |  |  |  |  |
Distribution of previously taxed foreign earnings and profits | (16,776) |  |  | — |  |  | — |
Federal research and development credits | (715) |  |  | (1,391) |  |  | (2,119) |
Foreign permanent benefit | (1,620) |  |  | (1,137) |  |  | (2,842) |
Foreign tax rate differential | 15,133 |  |  | (2,647) |  |  | (1,595) |
Foreign undistributed earnings, net of credits | 6,486 |  |  | 6,902 |  |  | 3,319 |
Liquidation of Cayman subsidiary | — |  |  | 745 |  |  | — |
Non-deductible items | 601 |  |  | 1,198 |  |  | 1,637 |
Non-territorial income | (2,323) |  |  | (2,993) |  |  | (2,493) |
Provision to return | (435) |  |  | (533) |  |  | (343) |
Sale of Argentina subsidiary | — |  |  | 2,084 |  |  | — |
Sale of intangible asset | (3,385) |  |  | — |  |  | — |
State and local taxes, net | (2,408) |  |  | (1,435) |  |  | (1,932) |
Stock-based compensation | 693 |  |  | (616) |  |  | (266) |
Tax rate change | (640) |  |  | — |  |  | (1,527) |
Uncertain tax positions | — |  |  | — |  |  | (1,565) |
Valuation allowance | 12,058 |  |  | 4,632 |  |  | 3,109 |
Withholding tax | 2,188 |  |  | 2,333 |  |  | 2,320 |
Other | (263) |  |  | 260 |  |  | 410 |
Tax provision | $ | 10,986 |  |  | $ | 10,779 |  |  | $ | 5,333 |
At December 31, 2022, we had federal and state Research and Development ("R&D") income tax credit carryforwards of approximately $4.2 million and $12.8 million, respectively. The federal R&D income tax credits begin expiring in 2039. The state R&D income tax credits do not have an expiration date. At December 31, 2022, we had state and local and foreign net operating loss carryforwards of approximately $50.6 million and $0.7 million, respectively. The state and local and foreign net operating loss carryforwards begin to expire in 2023 and 2027, respectively. At December 31, 2022, 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 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 2022, we have recorded a full valuation allowance against our U.S. federal and state deferred tax assets of $24.5 million and $20.1 million, respectively, as we have determined that it is more likely than not that the tax benefits will not be realized in the future. The valuation allowance increased by $12.1 million and $4.6 million during the years ended December 31, 2022 and 2021, 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 assets. Uncertain Tax Positions At December 31, 2022 and 2021, we had unrecognized tax benefits of approximately $3.2 million and $3.0 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, 2022, 2021, and 2020. 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) | 2022 |  | 2021 |  | 2020
Balance at beginning of period | $ | 3,001 |  |  | $ | 3,020 |  |  | $ | 4,094 |
Additions as a result of tax provisions taken during the current year | 149 |  |  | 226 |  |  | 274 |
Foreign currency translation | — |  |  | (13) |  |  | 20 |
Lapse in statute of limitations | — |  |  | — |  |  | (51) |
Settlements | — |  |  | (232) |  |  | — |
Other | — |  |  | — |  |  | (1,317) |
Balance at end of period | $ | 3,150 |  |  | $ | 3,001 |  |  | $ | 3,020 |
Approximately $3.2 million, $3.0 million and $3.0 million of the total amount of unrecognized tax benefits at December 31, 2022, 2021 and 2020, 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, 2022, the open statutes of limitations for our significant tax jurisdictions are as follows: U.S. federal for 2019 through 2021, state and local for 2018 through 2021, and non-U.S. for 2016 through 2021. 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, 2022, 2021 and 2020, we recorded a deferred tax liability of $0.5 million, $0.9 million and $2.1 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, 2022, 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. CHIPS and Science Act of 2022 On August 9, 2022, the CHIPS and Science Act of 2022 ("CHIPS Act") was enacted in the United States. The CHIPS Act will provide financial incentives to the semiconductor industry which are primarily directed at manufacturing activities within the United States for the qualifying property placed in service after December 31, 2022. As we currently outsource our manufacturing, the CHIPS Act is not expected to have a material impact to our consolidated tax provision for the year ending December 31, 2023. Inflation Reduction Act of 2022 The Inflation Reduction Act of 2022 ("IRA") was signed into law on August 16, 2022. The bill was meant to address the high inflation rate in the United States through various climate, energy, healthcare and other incentives. These incentives are meant to be paid for by the tax provisions included in the IRA, such as a new 15 percent corporate minimum tax, a 1 percent new excise tax on stock buybacks, additional IRS funding to improve taxpayer compliance and others. The IRA provisions are effective for tax years beginning after December 31, 2023.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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