Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(12)             Income Taxes

For financial reporting purposes, income before income taxes includes the following components:

	December 31,
	2013			2014		2015
United States	$	(14,757	)	$	8,033	$	(9,174	)
Foreign		(815	)		6,896		17,369
Total		(15,572	)		14,929		8,195

The components of income tax expense (benefit) for the years ended December 31, 2013, 2014 and 2015 were as follows (in thousands):

	December 31,
	2013			2014			2015
Current:
Federal	$	5,145		$	16,081		$	1,284
State		1,340			2,131			348
Foreign		6,180			5,769			7,999
		12,665			23,981			9,631
Deferred:
Federal		(10,026	)		(13,175	)		(1,998	)
State		(2,156	)		(1,291	)		318
Foreign		(5,839	)		(5,080	)		(5,347	)
		(18,021	)		(19,546	)		(7,027	)
Income tax expense (benefit)	$	(5,356	)	$	4,435		$	2,604

The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense (benefit) for the years ended December 31, 2013, 2014 and 2015 were as follows (in thousands):

	December 31,
	2013			2014			2015
Expected tax expense (benefit)	$	(5,450	)	$	5,225		$	2,869
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit		(694	)		712			464
Non-deductible items		240			896			981
Impact of foreign jurisdictions		433			(2,587	)		(1,751	)
Other		115			189			41
Income tax expense (benefit)	$	(5,356	)	$	4,435		$	2,604

The deferred tax assets (liabilities) as of December 31, 2014 and 2015 are as follows (in thousands):

	December 31,
	2014			2015
Deferred tax assets:
Allowance for doubtful accounts	$	3,607		$	3,937
Basis difference on intangible assets		7,623			22,555
Net operating loss carryforwards		2,334			386
Share-based compensation		10,462			11,326
Foreign currency translation		7,805			4,037
Tax credits		683			2,699
Other deferred tax assets		1,903			3,270
Total deferred tax assets		34,417			48,210
Deferred tax liabilities:
Basis difference of property and equipment		(227	)		(485	)
Cash to accrual and other method adjustments		(166	)		(597	)
Other deferred tax liabilities		(566	)		(56	)
Total deferred tax liabilities		(959	)		(1,138	)
Net deferred tax asset		33,458			47,072

As of December 31, 2015, the Company had $13.9 million in U.S. Federal net operating losses, which begin to expire in 2034, $11.4 million in U.S. Foreign Tax Credits, which begin to expire in 2024, $22.0 million in state net operating losses, which begin to expire in 2028, $102,000 in U.S. AMT credits which begin to expire in 2030, and approximately $800,000 in foreign net operating losses in the Canada which begin to expire in 2030. As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred tax assets as of December 31, 2014, and December 31, 2015 that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation that are greater than the compensation recognized for financial reporting. Equity will be increased by $6.3 million and $17.2 million, respectively, if and when such deferred tax assets are ultimately realized. The Company uses ASC 740 ordering when determining when excess tax benefits have been realized.

Companies are required to assess whether a valuation allowance should be recorded against their deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. The Company has evaluated its deferred tax assets each reporting period, including an assessment of its cumulative income or loss over the prior three-year period and future periods, to determine if a valuation allowance was required. On the basis of this evaluation as of December 31, 2015, the Company has determined that a valuation allowance is not necessary. 

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2015, the Company has not made a provision for U.S. income tax or additional foreign withholding taxes with respect to accumulated earnings of foreign subsidiaries where the foreign investment of such earnings is essentially permanent in duration. Generally, such amounts would become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the tax cost of repatriating the cumulative undistributed taxable earnings of these foreign subsidiaries to the United States.  

The Company applies the provisions of ASC 740 as it relates to uncertain tax positions. This interpretation prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full knowledge of all relevant information.

The following table summarizes the activity related to the unrecognized tax benefits for the years ended December 31, 2013, 2014 and 2015 (in thousands): 

Balance at January 1, 2013	$	327
Increase to prior year tax positions		28
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—
Balance at December 31, 2013	$	355
Increase to prior year tax positions		1,238
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Decrease related to settlements		—
Balance at December 31, 2014		1,593
Increase to prior year tax positions		612
Increase to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		(281	)
Decrease related to settlements		—
Balance at December 31, 2015	$	1,924

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Included in the unrecognized tax benefits noted above, the Company recorded penalties of $82,000 and $260,000 during the years ended December 31, 2013 and 2014, respectively and did not record any penalties during the year ended December 31, 2015. The Company recorded interest expense of $47,000, $94,000 and $21,000 during the years ended December 31, 2013, 2014 and 2015, respectively. As of December 31, 2014 and 2015, the Company had accrued penalties of $342,000 for each of the years ended, and accrued interest of $141,000 and $162,000, respectively.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. With few exceptions, as of December 31, 2015, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2010. The Company does not anticipate that the amount of the unrecognized benefit will significantly increase or decrease within the next 12 months.