Income Taxes from Continuing Operations (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Components of Income Tax Expense (Benefit)

The income tax provision (benefit) from continuing operations consisted of the following (in thousands):



	Current		Deferred			Total
Year ended December 31, 2017
Federal	$	78,806	$	(105,006	)	$	(26,200	)
State	1,706		(9,785		)	(8,079		)
Foreign	89		(458		)	(369		)
	$	80,601	$	(115,249	)	$	(34,648	)
Year ended December 31, 2016
Federal	$	107,818	$	(26,377	)	$	81,441
State	11,247		(4,325		)	6,922
Foreign	—		(1,306		)	(1,306		)
	$	119,065	$	(32,008	)	$	87,057
Year ended December 31, 2015
Federal	$	116,375	$	(41,477	)	$	74,898
State	11,113		(2,620		)	8,493
Foreign	—		(2,033		)	(2,033		)
	$	127,488	$	(46,130	)	$	81,358

Schedule of Effective Income Tax Rate Reconciliation

The income tax provision differs from the “expected” tax expense computed by applying the U.S. Federal corporate income tax rates of 35% to income from continuing operations before income taxes, as follows (in thousands):



	Years Ended December 31,
	2017			2016			2015
Computed “expected” tax provision	$	(20,719	)	$	94,955		$	81,255
Change in income taxes resulting from:
State income taxes, net of Federal income tax	(537		)	4,501			5,520
Change in state income tax rate, net of Federal income tax	(4,714		)	—			—
Foreign income tax provision (benefit)	2,206			1,580			(1,130		)
Deduction for domestic production activities	(2,527		)	(7,280		)	(6,882		)
Stock compensation	(1,316		)	(11,395		)	—
R&D tax credits	(1,200		)	(825		)	(677		)
Nondeductible acquisition fees	1,974			39			165
Interest and penalties from Federal audit	15,650			—			—
Federal rate change	(26,902		)	—			—
Discrete adjustments to prior year	1,561			—			—
Other expense, net	1,201			2,564			682
Valuation allowance change	675			2,918			2,425
Income tax provision	$	(34,648	)	$	87,057		$	81,358

Schedule of Income before Income Tax, Domestic and Foreign

The geographic allocation of the Company’s income from continuing operations before income taxes between U.S. and foreign operations was as follows (in thousands):



	2017			2016			2015
Pre-tax (loss) income from continuing U.S. operations	$	(49,572	)	$	287,880		$	241,665
Pre-tax loss from continuing foreign operations	(9,626		)	(16,580		)	(9,509		)
Total pre-tax (loss) income from continuing operations	$	(59,198	)	$	271,300		$	232,156

Schedule of Deferred Tax Assets and Liabilities

Net deferred income taxes at December 31, 2017 and 2016 include (in thousands):



	December 31,
	2017			2016
Deferred tax assets:
Net operating loss carry-forward	$	25,100		$	25,657
Stock-based compensation	7,668			8,922
Chargeback reserves	17,802			—
Reserve for product returns	9,479			16,208
Inventory valuation reserve	10,207			11,503
Long-term debt	3,084			6,383
Other	10,805			18,808
Total deferred tax assets	$	84,145		$	87,481
Valuation allowance	(10,531		)	(9,856		)
Net deferred tax assets	$	73,614		$	77,625
Deferred tax liabilities:
Prepaid expenses	$	(1,709	)	$	(3,091	)
Depreciation & amortization – tax over book	(108,788		)	$	(226,855	)
Total deferred tax liabilities	$	(110,497	)	$	(229,946	)
Net deferred income tax asset (liability)	$	(36,883	)	$	(152,321	)

Schedule of Unrecognized Tax Benefits Roll Forward

Based on its review as of December 31, 2017, the Company determined that it would not recognize tax benefits as follows (in thousands):



Balance at December 31, 2014	$	2,010
Additions relating to 2015	356
Payments of amounts relating to prior years	(81		)
Balance at December 31, 2015	$	2,285
Additions relating to 2016	303
Payments of amounts relating to prior years	(1,287		)
Balance at December 31, 2016	$	1,301
Additions relating to 2017	416
Additions relating to prior years	24,297
Terminations of exposures relating to prior years	(619		)
Balance at December 31, 2017	$	25,395