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Note I - Income Taxes | 12 Months Ended
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Dec. 31, 2022
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2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.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. As of December 31, 2020, the Company filed federal net operating loss carryback claims resulting in an income tax refund for $6.4 million and $3.2 million for tax years 2019 and 2018, respectively. As of December 31, 2022, the Company has received the tax refunds for the tax years 2019 and 2018 and $2.5 million of income tax refunds from the carryback of the loss generated in 2020. We have received the remaining tax refund of $5.3 million in March 2023. The components of income tax (benefit) expense are as follows:
|  | Year Ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 60 |  |  | $ | (372 | )
State and local |  |  | 774 |  |  |  | 856 |
Foreign |  |  | 1,546 |  |  |  | 804 |
Total current |  | $ | 2,380 |  |  | $ | 1,288 |
Deferred |  |  |  |  |  |  |  |
Federal |  | $ | (11,496 | ) |  | $ | — |
State and local |  |  | (8,347 | ) |  |  | — |
Total deferred |  | $ | (19,843 | ) |  | $ | — |
Total income (benefit) expense |  | $ | (17,463 | ) |  | $ | 1,288 |
The U.S. and foreign components of income before income taxes were as follows:
|  | Year Ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
United States |  | $ | 10,252 |  |  | $ | 11,725 |
Foreign |  |  | 9,061 |  |  |  | 4,534 |
Total income before income taxes |  | $ | 19,313 |  |  | $ | 16,259 |
The provision (benefit) for income taxes is based on the various rates set by federal, foreign and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements. The principal reasons for the difference between the statutory rate and the annual effective rate for 2022 were the impact of the release of the majority of the U.S. valuation allowance, federal and foreign income tax credits, and the benefit of excess stock benefits on vested restricted stock, offset by flow-through partnership income from a United Kingdom affiliate. The principal reasons for the difference between the statutory rate and the annual effective rate for 2021 were the impact of the flow-through partnership income from a United Kingdom affiliate offset by gain on PPP Term Note forgiveness and a change in valuation allowance. The differences between total income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes were as follows:
|  | Year Ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
Computed expected income tax expense (benefit) |  | $ | 4,056 |  |  | $ | 3,413 |
Permanent Differences |  |  | 91 |  |  |  | 172 |
Net effect of state income taxes |  |  | 1,074 |  |  |  | 520 |
Foreign subsidiary dividend inclusions |  |  | 639 |  |  |  | 447 |
Foreign tax rate differential |  |  | (349 | ) |  |  | (224 | )
Change in valuation allowance |  |  | (18,243 | ) |  |  | (1,424 | )
CARES Act NOL Carryback |  |  | — |  |  |  | (343 | )
Stock-based compensation windfalls |  |  | (365 | ) |  |  | (244 | )
Return to Provision |  |  | (141 | ) |  |  | 247 |
Change in Rate |  |  | (2,172 | ) |  |  | (373 | )
Credits |  |  | (1,126 | ) |  |  | (403 | )
Adjustments to State Attributes |  |  | (1,330 | ) |  |  | 1,561 |
Gain on PPP Loan Forgiveness |  |  | — |  |  |  | (2,122 | )
Other Adjustments, net |  |  | 403 |  |  |  | 61 |
Income tax (benefit) expense |  | $ | (17,463 | ) |  | $ | 1,288 |
Total income tax (benefit) expense was allocated as follows:
|  | Year Ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
Income (loss) from operations |  | $ | (17,463 | ) |  | $ | 1,288 |
Stockholders’ equity (deficit) |  |  | — |  |  |  | — |
Total |  | $ | (17,463 | ) |  | $ | 1,288 |
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 |  | 2022 |  |  | 2021 |
Deferred tax assets |  |  |  |  |  |  |  |
Deferred compensation and retirement plan |  | $ | 10,246 |  |  | $ | 13,135 |
Accrued expenses not deductible until paid |  |  | 33 |  |  |  | 181 |
Lease liability |  |  | 5,591 |  |  |  | 5,873 |
Employee stock-based compensation |  |  | 491 |  |  |  | 385 |
Accrued payroll not deductible until paid |  |  | 103 |  |  |  | 96 |
Accounts receivable, net |  |  | 43 |  |  |  | 59 |
Investment in foreign subsidiaries, outside basis difference |  |  | 1,047 |  |  |  | 1,019 |
Goodwill |  |  | 445 |  |  |  | 473 |
Interest Expense limitations |  |  | 913 |  |  |  | 1,267 |
Other, net |  |  | 585 |  |  |  | 452 |
Foreign net operating loss carryforwards |  |  | 1,623 |  |  |  | 1,631 |
State net operating loss carryforwards |  |  | 5,184 |  |  |  | 3,475 |
Foreign tax credit carryforwards |  |  | 4,212 |  |  |  | 3,841 |
General Business Credit Carryovers |  |  | 546 |  |  |  | 215 |
Total gross deferred tax assets |  |  | 31,062 |  |  |  | 32,102 |
Less valuation allowances |  |  | (7,652 | ) |  |  | (25,894 | )
Net deferred tax assets |  | $ | 23,410 |  |  | $ | 6,208 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property, plant and equipment |  | $ | (2,024 | ) |  | $ | (897 | )
Right-of-use asset |  |  | (4,765 | ) |  |  | (5,006 | )
Prepaid Expenses |  |  | (228 | ) |  |  | (305 | )
Other, net |  |  | (87 | ) |  |  | — |
Total gross deferred tax liabilities |  |  | (7,104 | ) |  |  | (6,208 | )
Net deferred tax assets (liabilities) |  | $ | 16,306 |  |  | $ | — |
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. After considering the weight of available information, (most notably the Company’s sustained profitability over the past two years), the Company concluded that it is more-likely-than-not that it will realize the majority of its U.S. deferred tax assets. Certain foreign tax credits as well as certain state net operating loss carryovers will continue to have a valuation allowance until there is substantial evidence that enough future taxable income exists at a more likely than not level in order to utilize those deferred tax assets. The valuation allowance for deferred tax assets was $7.7 million and $25.9 million as of December 31, 2022 and 2021, respectively. The change in the valuation allowance is $18.2 million for the year ended December 31, 2022. 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 2017. For U.S. federal and foreign returns, we are no longer subject to tax examinations for years prior to 2017. There is no balance of unrecognized tax benefits as of December 31, 2022 and 2021. Any adjustments to this liability as a result of the finalization of audits or potential settlements would not be material. We have elected to classify any interest and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Income. 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, 2022, the Company had no federal net operating loss carryforward. The federal foreign tax carryforward credits of $4.2 million will expire on various dates from 2023 to 2032. Federal general business credit carryforwards of $0.5 million will begin to expire on various dates from 2040 to 2042. The Company has state NOL carryforwards of $105.7 million, and foreign NOL carryforwards of $5.4 million. 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 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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