Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Pre-tax income (loss) consisted of the following for the years ended December 31:

	2021		2020		2019
Domestic	$	9,476	$	(55,907)	$	4,777
Foreign	22,649		11,407		16,779
Total	$	32,125	$	(44,500)	$	21,556

A reconciliation of income taxes computed at the statutory rates to the reported income tax provision for the years ended December 31 follows:

	2021		2020		2019
Federal (benefit) provision at statutory rate	$	6,746	$	(9,345)	$	4,527
U.S./Foreign tax rate differential	696		492		393
Foreign non-deductible expenses	515		702		2,059
Foreign tax provision	739		611		793
State taxes, net of federal benefit	315		(1,086)		308
State tax rate change, net of federal benefit	(432)		—		(41)
Change in uncertain tax positions	74		71		15
Change in valuation allowance	366		2,146		(2,054)
Tax credits	(1,341)		(143)		(2,652)
Share-based compensation	(857)		(15)		(14)
Executive compensation (IRC 162m)	1,128		—		—
Repatriation of foreign earnings	208		37		1,235
GILTI, net of related foreign tax credit	39		(1,340)		730
Other	197		419		479
(Benefit) Provision for income taxes	$	8,393	$	(7,451)	$	5,778

The provision (benefit) for income taxes for the years ended December 31 follows:

	2021						2020						2019
	Current		Deferred		Total		Current		Deferred		Total		Current		Deferred		Total
Federal	$	46	$	2,377	$	2,423	$	109	$	(10,975)	$	(10,866)	$	(205)	$	(336)	$	(541)
State and local	152		(439)		(287)		120		(559)		(439)		214		883		1,097
Foreign	6,126		131		6,257		4,449		(595)		3,854		4,207		1,015		5,222
Total	$	6,324	$	2,069	$	8,393	$	4,678	$	(12,129)	$	(7,451)	$	4,216	$	1,562	$	5,778

A summary of deferred income tax assets and liabilities as of December 31 follows:

	2021		2020
Noncurrent deferred tax assets:
Amortization and fixed assets	$	7,371	$	5,094
Inventories	3,914		2,325
Pension obligations	2,599		2,827
Warranty obligations	354		473
Accrued benefits	400		551
Operating leases	308		664
Tax credit carryforwards	7,106		6,030
Net operating loss carryforwards	14,944		17,369
Other temporary differences	5,483		7,089
Total noncurrent deferred tax assets	$	42,479	$	42,422
Valuation allowance	(18,371)		(16,441)
Net noncurrent deferred tax assets	$	24,108	$	25,981
Noncurrent deferred tax liabilities:
Amortization and fixed assets	$	(968)	$	(952)
Inventories	103		115
Pension obligations	—		161
Other temporary differences	(303)		(385)
Total noncurrent tax liabilities	(1,168)		(1,061)
Total net deferred tax asset	$	22,940	$	24,920

We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with unused tax attributes expiring and tax planning alternatives. In making such judgments, significant weight is given to evidence that can be objectively verified.

During 2021, we recorded an additional valuation allowance of $2.5 million primarily related to the deferred tax assets of our United Kingdom subsidiary and certain U.S. federal and state tax attribute carryforwards, and released $0.6 million in valuation allowances primarily related to the deferred tax assets of our Luxembourg subsidiary. We expect to be able to realize the benefits of all of our deferred tax assets that are not currently offset by a valuation allowance, as discussed above. In the event that our actual results differ from our estimates or we adjust these estimates in future periods, the effects of these adjustments could materially impact our financial position and results of operations.

Activity for the years ended December 31 is as follows (in thousands):

	2021		2020		2019
Balance - Beginning of the year	$	16,441	$	11,992	$	14,665
Provisions	2,529		4,511		706
Utilizations	(599)		(62)		(3,379)
Balance - End of the year	$	18,371	$	16,441	$	11,992

As of December 31, 2021, the Company had net operating loss carryforwards of $109.9 million, of which $49.6 million related to foreign jurisdictions and $60.3 million related to U.S. state jurisdictions. The carryforward periods for these net operating losses range from five years to indefinite. Utilization of these losses is subject to the tax laws of the applicable tax jurisdiction and may be limited by the ability of certain subsidiaries to generate taxable income in the associated tax jurisdiction. We have established valuation allowances for all net operating losses that we believe are more likely than not to expire before they can be utilized.

As of December 31, 2021, we had $3.2 million of U.S. foreign tax credit carryforwards, net of a $2.3 million valuation allowance, primarily attributable to the deemed repatriation of the accumulated untaxed earnings of our foreign subsidiaries

resulting from the U.S. Tax Reform. Utilization of these credits may be limited if the Company does not generate sufficient U.S. federal taxable income in future years. The credits begin to expire in 2027.

As of December 31, 2021, we had $1.0 million of research and development tax credit carryforwards related to our U.S. operations. Utilization of these credits may be limited if the Company does not generate sufficient U.S. federal taxable income in future years. The credits begin to expire in 2032.

As of December 31, 2021, cash of $34.6 million was held by foreign subsidiaries. During the year ended December 31, 2021, $5.3 million was repatriated from the Company's foreign subsidiaries. The Company had a $0.5 million deferred tax liability as of December 31, 2021 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which no indefinite reinvestment assertion has been made.

We file federal income tax returns in the U.S. and income tax returns in various states and foreign jurisdictions. In the U.S., we are generally no longer subject to tax assessment for tax years prior to 2017. In our major non-U.S. jurisdictions including China, Czech Republic, Mexico and the United Kingdom, tax years are typically subject to examination for three to five years.

As of December 31, 2021, and 2020, we provided a liability of $1.1 million and $1.0 million, respectively, for unrecognized tax benefits associated with our U.S. federal and state, and foreign jurisdictions. The majority of these unrecognized tax benefits are netted against their related non-current deferred tax assets.

We accrue interest and penalties related to unrecognized tax benefits through income tax expense. We had $0.5 million and $0.5 million accrued for the payment of interest and penalties as of December 31, 2021 and December 31, 2020, respectively. Accrued interest and penalties are included in the $1.1 million of unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits (including interest and penalties) at December 31 follows:

	2021		2020		2019
Balance - Beginning of the year	$	1,006	$	908	$	894
Gross increase - tax positions in prior periods	75		73		70
Gross decreases - tax positions in prior periods	—		—		(39)
Lapse of statute of limitations	—		—		(12)
Currency translation adjustment	12		25		(5)
Balance - End of the year	$	1,093	$	1,006	$	908