Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Loss Before Income Tax Provision (Benefit)

The Company’s income before income tax provision was subject to taxes in the following jurisdictions for the following periods (in thousands):



	Years Ended December 31,
	2019		2018		2017
United States	$	55,352	$	100,031	$	50,706
Foreign	40,417		31,241		17,349
	$	95,769	$	131,272	$	68,055

Expense Benefit for Income Taxes

The expense (benefit) for income taxes is comprised of (in thousands):



	Years Ended December 31,
	2019			2018		2017
Current tax provision:
Federal	$	1,022		$	736	$	610
State	1,403			1,880		1,259
Foreign	9,933			6,577		6,135
	12,358			9,193		8,004
Deferred tax expense (benefit):
Federal	10,185			14,844		20,746
State	335			1,086		(1,127		)
Foreign	(6,338		)	895		(1,235		)
	4,182			16,825		18,384
Income tax provision	$	16,540		$	26,018	$	26,388

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):



	December 31,
	2019			2018
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$	22,926		$	13,495
Basis difference related to fixed assets	8,381			5,342
Compensation and benefits	7,580			8,416
Basis difference for inventory valuation	849			1,784
Compensatory stock options and rights	3,404			3,988
Operating loss carryforwards	9,080			7,191
Tax credit carryforwards	55,001			54,219
ASC 842 lease liability	44,768			—
Interest expense carryforward	5,057			—
Basis difference related to intangible assets with a definite life	354			12,767
Other	2,790			5,798
Total deferred tax assets	160,190			113,000
Valuation allowance for deferred tax assets	(14,469		)	(13,408		)
Deferred tax assets, net of valuation allowance	$	145,721		$	99,592
Deferred tax liabilities:
Prepaid expenses	(1,685		)	(1,181		)
Basis difference related to intangible assets with an indefinite life	(99,712		)	(25,128		)
ASC 842 right-of-use assets	(43,859		)	—
Total deferred tax liabilities	(145,256		)	(26,309		)
Net deferred tax assets	$	465		$	73,283
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets as follows:
Non-current deferred tax assets	$	73,948		$	75,079
Non-current deferred tax liabilities	(73,483		)	(1,796		)
Net deferred tax assets	$	465		$	73,283

Credit Carryforward Expiry

At December 31, 2019, the Company had federal and state income tax credit carryforwards of $47,378,000 and $20,088,000, respectively, which will expire if unused at various dates beginning on December 31, 2020. Such credit carryforwards expire as follows (in thousands):



U.S. foreign tax credit	$	28,599	2020 - 2029
U.S. research tax credit	$	18,758	2031 - 2039
U.S. business tax credits	$	21	2031 - 2039
State investment tax credits	$	1,148	Do not expire
State research tax credits	$	18,940	Do not expire

Net Operating Losses Expiry

The Company has recorded a deferred tax asset reflecting the benefit of operating loss carryforwards. The net operating losses expire as follows (in thousands):



U.S. loss carryforwards	$	—	N/A
State loss carryforwards	$	101,205	2025 - 2036

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:



	Years Ended December 31,
	2019		2018		2017
Statutory U.S. tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of U.S. tax benefit	1.6	%	1.8	%	1.8	%
Foreign income taxed at other than U.S. statutory rate	(5.0	)%	1.1	%	(0.6	)%
Federal tax credits	(3.5	)%	(4.4	)%	(2.7	)%
Other non-deductible expenses	1.2	%	0.7	%	1.1	%
Non-deductible compensation	1.5	%	0.8	%	0.7	%
Stock option compensation excess tax benefits	(1.5	)%	(1.0	)%	(2.0	)%
Intra-entity asset transfers	—	%	0.8	%	(6.3	)%
U.S. foreign tax inclusions	0.1	%	1.1	%	1.6	%
Foreign derived intangible income deduction	(3.2	)%	(2.7	)%	—	%
Impact of uncertain tax positions	3.7	%	0.8	%	1.8	%
Enactment of the Tax Cuts and Jobs Act	—	%	0.3	%	11.1	%
Change in deferred tax valuation allowance	0.2	%	—	%	(2.0	)%
Other	1.2	%	(0.5	)%	(0.7	)%
Effective tax rate	17.3	%	19.8	%	38.8	%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	2019			2018			2017
Balance at January 1	$	11,832		$	9,300		$	8,256
Additions based on tax positions related to the current year	3,224			1,354			1,061
Additions for tax positions of prior years	593			1,624			233
Reductions for tax positions of prior years	(174		)	(148		)	(192		)
Settlement of tax audits	(7		)	—			(33		)
Current year acquisitions	11,006			—			—
Reductions due to lapsed statute of limitations	(481		)	(298		)	(25		)
Balance at December 31	$	25,993		$	11,832		$	9,300

Major Jurisdictions No Longer Subject to Income Tax Examinations by Tax Authorities

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is generally no longer subject to income tax examinations by tax authorities in its major jurisdictions as follows:



Major Tax Jurisdiction	Years No Longer Subject to Audit
U.S. federal	2010 and prior
California (U.S.)	2008 and prior
Germany	2013 and prior
Japan	2012 and prior
South Korea	2013 and prior
United Kingdom	2015 and prior