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Note I - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note I — Income Taxes Coronavirus Aid, Relief and Economic Security Act In response to the COVID- 19 pandemic, the CARES Act was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 ( “2017 Tax Act”). Under the CARES Act, corporate taxpayers may carryback net operating losses (“ NOLs”) realized during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income ( 30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15 -year cost-recovery and 100% bonus depreciation. The components of income tax (benefit) expense are as follows:
|  | Year Ended December 31, |
In thousands |  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | (17,286 | ) |  | $ | 216 |
State and local |  |  | 696 |  |  |  | 504 |
Foreign |  |  | 219 |  |  |  | 37 |
Total current |  | $ | (16,371 | ) |  | $ | 757 |
Deferred |  |  |  |  |  |  |  |
Federal |  | $ | 1,398 |  |  | $ | 623 |
State and local |  |  | (2,163 | ) |  |  | (96 | )
Foreign |  |  | 521 |  |  |  | 469 |
Total deferred |  | $ | (244 | ) |  | $ | 996 |
Total income tax (benefit) expense |  | $ | (16,615 | ) |  | $ | 1,753 |
The U.S. and foreign components of loss before income taxes were as follows:
|  | Year Ended December 31, |
In thousands |  | 2020 |  |  | 2019 |
United States |  | $ | (20,683 | ) |  | $ | (29,003 | )
Foreign |  |  | 2,374 |  |  |  | 4,492 |
Total loss before income taxes |  | $ | (18,309 | ) |  | $ | (24,511 | )
The differences between total income tax (benefit) expense and the amount computed by applying the statutory federal income tax rate of 21% to loss before income taxes were as follows:
|  | Year Ended December 31, |
In thousands |  | 2020 |  |  | 2019 |
Computed expected income tax benefit |  | $ | (3,845 | ) |  | $ | (5,147 | )
Net effect of state income taxes |  |  | (223 | ) |  |  | (509 | )
Foreign subsidiary dividend inclusions |  |  | 1,208 |  |  |  | 1,083 |
Foreign tax rate differential |  |  | 281 |  |  |  | (268 | )
Change in valuation allowance |  |  | (7,538 | ) |  |  | 6,085 |
CARES Act NOL Carryback |  |  | (6,816 | ) |  |  | — |
Stock-based compensation shortfalls |  |  | 296 |  |  |  | 238 |
Return to Provision |  |  | — |  |  |  | 216 |
Other, net |  |  | 22 |  |  |  | 55 |
Income tax (benefit) expense for the period |  | $ | (16,615 | ) |  | $ | 1,753 |
Total income tax (benefit) expense was allocated as follows:
|  | Year Ended December 31, |
In thousands |  | 2020 |  |  | 2019 |
(Loss) income from operations |  | $ | (16,615 | ) |  | $ | 1,753 |
Stockholders' deficit |  |  | — |  |  |  | — |
Total |  | $ | (16,615 | ) |  | $ | 1,753 |
We expect to receive tax refunds of $17.1 million from NOL Carrybacks pursuant to the CARES Act. This amount is comprised of $9.6 million already received for carryback claims filed during the year, and an expected $7.5 million refund from the carryback of the loss generated in 2020. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The legislation significantly changed U.S. tax law by, among other things, lowering the corporate income tax rate from 35% to 21%, implementing a territorial tax system. The Tax Reform Act subjects a U.S. shareholder to tax on Global Intangible Low Tax Income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A Topic 740, No. 5 “Accounting for Global Intangible Low-Taxed Income”, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We elected to account for GILTI as a current period expense when incurred. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
|  | Year Ended December 31, |
In thousands |  | 2020 |  |  | 2019 |
Deferred tax assets |  |  |  |  |  |  |  |
Deferred compensation and retirement plan |  | $ | 16,541 |  |  | $ | 18,067 |
Accrued expenses not deductible until paid |  |  | 237 |  |  |  | 2,331 |
Lease liability |  |  | 6,346 |  |  |  | 4,217 |
Employee stock-based compensation |  |  | 440 |  |  |  | 736 |
Accrued payroll not deductible until paid |  |  | 108 |  |  |  | 196 |
Accounts receivable, net |  |  | 53 |  |  |  | 156 |
Investment in foreign subsidiaries, outside basis difference |  |  | 1,124 |  |  |  | 1,336 |
Goodwill |  |  | 581 |  |  |  | 649 |
Interest Expense limitations |  |  | 1,530 |  |  |  | — |
Other, net |  |  | 440 |  |  |  | 156 |
Foreign net operating loss carryforwards |  |  | 1,771 |  |  |  | 2,364 |
State net operating loss carryforwards |  |  | 4,763 |  |  |  | 4,387 |
Foreign tax credit carryforwards |  |  | 3,653 |  |  |  | 3,653 |
Federal net operating loss carryforwards |  |  | — |  |  |  | 5,394 |
Total gross deferred tax assets |  |  | 37,587 |  |  |  | 43,642 |
Less valuation allowances |  |  | (30,841 | ) |  |  | (38,379 | )
Net deferred tax assets |  | $ | 6,746 |  |  | $ | 5,263 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property, plant and equipment |  | $ | (625 | ) |  | $ | (1,159 | )
Right-of-use asset |  |  | (5,583 | ) |  |  | (3,785 | )
Prepaid Expenses |  |  | (318 | ) |  |  | (279 | )
Other, net |  |  | (220 | ) |  |  | (284 | )
Total gross deferred tax liabilities |  |  | (6,746 | ) |  |  | (5,507 | )
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | (244 | )
A reconciliation of the beginning and ending balance of deferred tax valuation allowance is as follows:
In thousands |  |  |  |
Balance at December 31, 2018 |  | $ | 31,170 |
Deferred Income Tax Expense |  |  | 6,086 |
Return to Provision Impact |  |  | (364 | )
Other Comprehensive Income |  |  | 1,487 |
Balance at December 31, 2019 |  |  | 38,379 |
Deferred Income Tax Benefit |  |  | (7,534 | )
Return to Provision Impact |  |  | 12 |
Other Comprehensive Income |  |  | (16 | )
Balance at December 31, 2020 |  | $ | 30,841 |
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 valuation allowance for deferred tax assets was $30.8 million and $38.4 million at December 31, 2020 and 2019 , respectively. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present, and additional weight may be given to subjective evidence such as changes in our growth projections. We or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state returns, we are no longer subject to tax examinations for years prior to 2014. For U.S. federal and foreign returns, we are no longer subject to tax examinations for years prior to 2016. The Company is currently under federal audit for the tax years ended December 31, 2018 and 2016, however we expect no material adjustments. There is no balance of unrecognized tax benefits as of December 31, 2020 and 2019. Any adjustments to this liability as a result of the finalization of audits or potential settlements would not be material. Effective January 1, 2019 we adopted ASU 2018 - 02 which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the reduction of the U.S. federal statutory income tax rate from 35% to 21% due to the enactment of the Tax Reform Act. As a result of the adoption, we reclassified $11.4 million of stranded tax effects from accumulated other comprehensive income to retained earnings. We have elected to classify any interest and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Loss. For U.S. tax return purposes, net operating losses and tax credits are normally available to be carried forward to future years, subject to limitations as discussed below. As of December 31, 2020 , the Company has federal net operating loss carryforward of $21.6 million, which the company is expecting to carry back pursuant to CARES Act. Federal Foreign tax carryforward credit of $3.7 million will expire on various dates from 2023 to 2026. The Company has state NOL carryforwards of $90.3 million, for which a full valuation allowance has been recorded, and foreign NOL carryforwards of $6.2 million, for which a valuation allowance of $6.2 million has been recorded. Deferred income taxes have not been provided on the undistributed earnings of our foreign subsidiaries as these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. It is not practicable to estimate the amount of additional taxes which may be payable upon the distribution of these earnings. However, because of the provisions in the Tax Reform Act, the tax cost of repatriation is immaterial and limited to foreign withholding taxes, currency translation and state taxes.

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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=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
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