Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit)

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



	Current			Deferred			Total
Year ended December 31, 2018
Federal	$	2,768		$	(40,345	)	$	(37,577	)
State	(1,677		)	(2,093		)	(3,770		)
Foreign	32			5,042			5,074
	$	1,123		$	(37,396	)	$	(36,273	)
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

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 21% to income before income taxes, as follows (in thousands):



	Years Ended December 31,
	2018			2017			2016
Computed “expected” tax provision	$	(92,018	)	$	(20,719	)	$	94,955
Change in income taxes resulting from:
State income taxes, net of Federal income tax	(11,667		)	(537		)	4,501
Change in state income tax rate, net of Federal income tax	(16		)	(4,714		)	—
Foreign income tax (benefit) provision	(1,658		)	2,206			1,580
Deduction for domestic production activities	—			(2,527		)	(7,280		)
Stock compensation	2,480			(1,316		)	(11,395		)
R&D tax credits	(750		)	(1,200		)	(825		)
Nondeductible acquisition fees	(1,165		)	1,974			39
Interest and penalties from Federal audit	7,935			15,650			—
Federal rate change	(3,027		)	(26,902		)	—
Discrete adjustments to prior year	570			1,561			—
162(m) Officers Compensation Limitation	1,483			—			—
Other expense, net	934			1,201			2,564
Valuation allowance change	60,626			675			2,918
Income tax (benefit) provision	$	(36,273	)	$	(34,648	)	$	87,057

Schedule of Income before Income Tax, Domestic and Foreign

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



	2018			2017			2016
Pre-tax (loss) income from U.S. operations	$	(428,299	)	$	(49,572	)	$	287,880
Pre-tax loss from foreign operations	(9,883		)	(9,626		)	(16,580		)
Total pre-tax (loss) income	$	(438,182	)	$	(59,198	)	$	271,300

Schedule of Deferred Tax Assets and Liabilities

Net deferred income taxes at December 31, 2018 and 2017 include (in thousands):



	December 31,
	2018			2017
Deferred tax assets:
Net operating loss carry-forward	$	48,766		$	25,100
Stock-based compensation	9,071			7,668
Chargeback reserves	14,173			17,802
Reserve for product returns	8,012			9,479
Inventory valuation reserve	9,688			10,207
Long-term debt	2,226			3,084
Interest greater than 30% of EBITDA	13,930			—
Other	16,444			10,806
Total deferred tax assets	$	122,310		$	84,146
Valuation allowance	(71,157		)	(10,531		)
Net deferred tax assets	$	51,153		$	73,615
Deferred tax liabilities:
Prepaid expenses	$	(2,137	)	$	(1,709	)
Depreciation & amortization – tax over book	(49,547		)	(108,788		)
Other	$	(35	)	$	—
Total deferred tax liabilities	$	(51,719	)	$	(110,497	)
Net deferred income tax (liability)	$	(566	)	$	(36,882	)

Schedule of Unrecognized Tax Benefits Roll Forward

Based on its review as of December 31, 2018, the Company determined that it would not recognize tax benefits as follows (in thousands):



Balance at December 31, 2015	$	2,285
Additions relating to current year	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
Additions relating to 2018	269
Additions relating to prior years	4,425
Terminations of exposures relating to prior years	(702		)
Balance at December 31, 2018	$	29,387