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Income Taxes
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes  Income Taxes
 
The significant components of our deferred income tax liabilities and assets were as follows (in thousands):
 
December 31,
 
2019
 
2018
Deferred income tax (liabilities):
 
 
 
Accrued expenses
$
(971
)
 
$
—

Bad Debt
(260
)
 
—

Fixed Assets
(14,044
)
 
(6,343
)
Intangible Assets
(54,032
)
 
(73,558
)
Inventory
(1,121
)
 
—

Other
(697
)
 
151

Pension
(210
)
 
—

Total deferred income tax liabilities
(71,335
)
 
(79,750
)
Deferred income tax assets:
 
 
 
Accrued expenses
5,202

 
15,153

Bad Debt
2,247

 
(2,069
)
Equity Compensation
3,373

 
4,760

Intangible Assets
4

 
—

Inventory
7,439

 
4,696

Other
11,510

 
307

Net operating loss and credit carry-forward
23,124

 
26,298

Pension
32,901

 
29,400

Interest
9,836

 
5,067

Total deferred income tax assets
95,636

 
83,612

Valuation allowance
(14,303
)
 
(17,562
)
Deferred income tax asset, net of valuation allowance
81,333

 
66,050

Deferred income tax (liability)/asset, net
$
9,998

 
$
(13,700
)



 
The (benefit from) provision for income taxes is based on the following pre-tax income (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Domestic
$
(45,209
)
 
$
(71,059
)
 
$
(4,406
)
Foreign
35,117

 
47,163

 
8,046

(Loss) income before income taxes
$
(10,092
)
 
$
(23,896
)
 
$
3,640


 
The provision for income taxes consisted of the following (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Current provision:
 
 
 
 
 
Federal - U.S.
$
—

 
$
—

 
$
(447
)
Foreign
17,522

 
11,583

 
4,586

State -U.S.
594

 
235

 
442

Total current
$
18,116

 
$
11,818

 
$
4,581

Deferred provision (benefit):
 
 
 
 
 
Federal - U.S.
$
8,414

 
$
621

 
$
(6,764
)
Foreign
(11,768
)
 
(1,323
)
 
(4,640
)
State -U.S.
(86
)
 
(1,665
)
 
(388
)
Total (benefit) deferred
(3,440
)
 
(2,367
)
 
(11,792
)
Total (benefit) provision for income taxes
$
14,676

 
$
9,451

 
$
(7,211
)


Actual income taxes reported from operations were different from those that would have been computed by applying the federal statutory tax rate to income before income taxes. The expense for income taxes differed from the U.S. statutory rate due to the following:
 
Year Ended December 31,
 
2019
 
2018
 
2017
Expected federal income tax rate
21.0
 %
 
21.0
 %
 
35.0
 %
State income taxes, net of federal tax benefit
15.5

 
3.8

 
(5.7
)
US permanent differences
(1.6
)
 
(1.0
)
 
22.7

Foreign tax rate differential and credits
(26.0
)
 
(7.6
)
 
(66.4
)
Unbenefited foreign losses
(0.5
)
 
(5.5
)
 
—

Tax reserve
(0.3
)
 
1.3

 
(27.0
)
Rate Change
5.9

 
—

 
(13.9
)
GILTI
(3.9
)
 
(20.7
)
 
—

Intercompany financing
30.4

 
12.7

 
(17.8
)
Foreign tax credit writeoff
—

 
(45.6
)
 
—

Foreign-derived intangible income ("FDII")
10.7

 
0.1

 
—

Prior period adjustment
44.1

 
4.3

 
(0.6
)
Dispositions
(227.0
)
 
—

 
4.7

Other, net
(16.0
)
 
(0.8
)
 
3.9

Equity compensation
(10.8
)
 
(4.2
)
 
(2.7
)
Release of contingent consideration
—

 
—

 
(113.9
)
Research and development
13.1

 
2.7

 
(14.0
)
Effective tax rate
(145.4
)%
 
(39.5
)%
 
(195.7
)%

 
As of December 31, 2019 and 2018, the Company maintained a total valuation allowance of $14.3 million and $17.6 million, respectively, which relates to foreign, federal, and state deferred tax assets as of December 31, 2019 and foreign, federal and
state deferred tax assets as December 31, 2018. The valuation allowance is based on estimates of taxable income in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable. The movement in the valuation allowance is primarily due to reclassification of balances to assets held for sale.

The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2019, 2018, and 2017 (in thousands):
 
December 31,
 
2019
 
2018
 
2017
Deferred tax valuation allowance at January 1
$
17,562

 
$
22,067

 
$
3,028

     Additions
—

 
10,960

 
712

     Acquired
150

 
(15,431
)
 
18,494

     Deductions
(2,838
)
 
(34
)
 
(167
)
Reclass to assets available for sale
(571
)
 
—

 
—

Deferred tax valuation allowance at December 31
$
14,303

 
$
17,562

 
$
22,067



 
The Company files income tax returns in the U.S. federal, state and local jurisdictions and in foreign jurisdictions. The Company is no longer subject to examination by the Internal Revenue Service ("IRS") for years prior to 2016 and is no longer subject to examination by the tax authorities in foreign and state jurisdictions prior to 2006, with the exception of net operating loss carryforwards. The Company is currently under examination for income tax filings in various foreign jurisdictions.

As of December 31, 2019, the Company had foreign tax credits of $11.3 million, foreign net operating losses of $9.4 million, state net operating losses of $68.8 million and state tax credits of $2.0 million. As of December 31, 2018, the Company had foreign tax credits of $16.8 million, foreign net operating losses of $37.3 million, federal net operating losses of $3.0 million, state net operating losses of $70.0 million and state tax credits of $2.4 million. The foreign tax credits, if not utilized, will expire in 2026. A portion of the foreign net operating losses ($4.5 million) expire at various dates through 2026; the remainder have an unlimited carryforward period. The federal net operating losses have an unlimited carryforward period. The state net operating losses and state tax credits, if not utilized, will expire at various dates through 2036.

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 35% to 21%; limitations on the deductibility of interest expense and executive compensation; creation of the base erosion anti-abuse tax (“BEAT”), a new minimum tax; GILTI; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system. The change to a modified territorial tax system resulted in a one-time U.S. tax liability on those earnings which have not previously been repatriated to the U.S. (the “Transition Tax”), with future distributions not subject to U.S. federal income tax when repatriated. A majority of the provisions in the Tax Act were effective January 1, 2018 and have been reflected in our financial statements. With respect to GILTI, the Company has adopted a policy to account for this provision as a period cost.

In response to the Tax Act, the SEC staff issued guidance on accounting for the tax effects of the Tax Act (ASU 2018-05). The guidance provided a one-year measurement period for companies to complete the accounting. The Company has adopted the impact of ASU 2018-05 in our financial statements.

In connection with the impact of the Tax Act, we recorded a $0.5 million net tax benefit for the period ended December 31, 2017. This benefit consists of zero net expense for the Transition Tax liability, and $0.5 million benefit from the remeasurement of our deferred tax assets/liabilities due to the corporate rate reduction. The Company did not owe the one-time Transition Tax liability, based on foreign tax pools that are in excess of U.S. tax rates. The impact of the Tax Act resulted in a valuation allowance on a portion of our U.S. foreign tax credit carryforwards (deferred tax asset), in the amount of $10.9 million expense which was recorded in 2018.

As of December 31, 2019, the liability for uncertain income tax positions was approximately $0.6 million. Approximately $0.6 million as of December 31, 2019 represents the amount that if recognized would affect the Company’s effective income tax rate in future periods. The Company does not expect the unrecognized tax benefits to change over the next 12 months. The table below does not include interest and penalties of $0.0 million and $0.4 million as of December 31, 2019 and 2018, respectively.


The following is a reconciliation of the Company’s liability for uncertain income tax positions for the years ended December 31, 2019, 2018 and 2017 (in thousands):
 
December 31,
 
2019
 
2018
 
2017
Balance beginning January 1
$
593

 
$
3,014

 
$
3,000

Additions/(reductions) for tax positions of prior years
—

 
(460
)
 
(7
)
Additions/(reductions) based on tax positions related to current year
37

 
(340
)
 
(65
)
Acquired uncertain tax position balance
—

 
(512
)
 
1,221

Settlements
—

 
(1,103
)
 
(338
)
Lapse of statute of limitations
—

 
(6
)
 
(978
)
Currency movement
—

 
—

 
181

Balance ending December 31
$
630

 
$
593

 
$
3,014


 
Undistributed earnings of our foreign subsidiaries amounted to $196.4 million and $259.9 million at December 31, 2019 and December 31, 2018, respectively. The undistributed earnings of our foreign subsidiaries are considered to be indefinitely reinvested and accordingly, no provision for U.S. federal and state income taxes has been recorded. Determination of the amount of unrecognized deferred tax liability on these undistributed earnings is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios, and the variation due to multiple potential assumptions relating to the timing of any future repatriation.