Income Taxes:

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Income from continuing operations before taxes consisted of the following (in thousands): 

	Year Ended December 31,
	2024		2023		2022
United States	$	(116,024)	$	(136,980)	$	(135,646)
Foreign	50,012		58,681		21,237
	$	(66,012)	$	(78,299)	$	(114,409)

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

	Year Ended December 31,
	2024		2023		2022
Current:
Federal	$	16,589	$	(8,235)	$	4,128
State	4,256		5,035		3,799
Foreign	25,164		24,500		12,924
	$	46,009	$	21,300	$	20,851
Deferred:
Federal	$	1,294	$	(43,042)	$	(42,012)
State	14,850		(14,657)		(11,239)
Foreign	(10,477)		(12,245)		(7,723)
	5,667		(69,944)		(60,974)
	$	51,676	$	(48,644)	$	(40,123)

We have accrued for tax contingencies for potential tax assessments, and in 2024 we recognized a $5.7 million net decrease, most of which related to federal, state, and foreign tax reserves net of the release of various federal and foreign tax reserves.

A reconciliation of the provision for income taxes at the statutory rate to our effective tax rate is as follows (dollars in thousands):

	Year Ended December 31,
	2024				2023				2022
	Amount		Percent		Amount		Percent		Amount		Percent
Federal tax at the expected statutory rate	$	(13,862)	21.0	%	$	(16,443)	21.0	%	$	(24,026)	21.0	%
State income tax, net of federal effect	701		(1.1)	%	(6,057)		7.7	%	(5,050)		4.4	%
Tax credits	(10,985)		16.6	%	(9,824)		12.5	%	(3,636)		3.2	%
Global intangible low-taxed income	2,977		(4.5)	%	(2,658)		3.4	%	2,303		(2.0)	%
Foreign income tax differential	(4,231)		6.4	%	(2,506)		3.2	%	(2,943)		2.5	%
Stock-based compensation	2,824		(4.3)	%	(289)		0.4	%	(3,721)		3.2	%
Foreign-derived intangible income	(3,756)		5.7	%	(3,299)		4.2	%	(2,269)		2.0	%
Transaction cost	—		—	%	—		—	%	2,299		(2.0)	%
Contingent consideration	(838)		1.3	%	(3,407)		4.4	%	(6,830)		6.0	%
Section 162(m)	1,880		(2.8)	%	3,268		(4.2)	%	3,942		(3.4)	%
Tax reserve releases	(2,216)		3.3	%	(6,884)		8.8	%	(1,834)		1.6	%
Legal Settlement	(2,100)		3.2	%	—		—	%	—		—	%
Valuation allowance	81,713		(123.8)	%	—		—	%	—		—	%
Other	(431)		0.7	%	(545)		0.7	%	1,642		(1.4)	%
	$	51,676	(78.3)	%	$	(48,644)	62.1	%	$	(40,123)	35.1	%

Tax credits in 2024, 2023 and 2022 consist principally of research and developmental tax credits. 

The components of our deferred income tax assets (liabilities) are as follows (in thousands):

	As of December 31,
	2024		2023
Deferred tax asset:
Accruals/other	$	40,849	$	30,190
Acquired future tax deductions	7,869		10,877
Stock-based compensation	3,940		6,987
Tax credits	17,068		15,095
Inventory reserves	25,015		25,592
Warranty reserve	1,098		13,788
Section 163(j) - interest expense limitation	27,078		25,467
Chargebacks, discounts, customer concessions	52,709		39,077
Capitalized research and development	56,975		43,313
Valuation allowance	(90,950)		(8,452)
	$	141,651	$	201,934
Deferred tax liability:
State income taxes	$	5,886	$	4,465
Depreciation and amortization	160,368		212,429
Foreign currency translation and derivative instrument adjustments	—		3,630
	$	166,254	$	220,524
Deferred tax (liability) asset, net	$	(24,603)	$	(18,590)

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a valuation allowance of $81.7 million tax expense and $3.9 million foreign currency translation and derivative instrument adjustments against certain U.S. federal and state deferred tax assets for the tax years ending December 31, 2024. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. Our ability to use our deferred tax assets depends on the amount of taxable income in future periods.

Tax Holidays and Carryforwards

Net operating loss ("NOL") carryforwards consist of: (a) federal NOL carryforwards of $1.3 million which will expire at various dates from 2031 to indefinite carryforward periods, (b) state NOL carryforwards of $2.6 million which has indefinite carryforward periods and (c) foreign NOL carryforwards of $114.3 million which will expire at various dates from 2025 to indefinite carryforward periods. We have recorded a net deferred tax asset of $6.8 million, $29.5 million gross deferred tax asset net of tax reserves of $22.7 million, related to our foreign NOL carryforwards. The deferred tax assets recognized for these foreign NOLs are presented net of tax reserves. We believe that it is more likely than not that the benefit from certain foreign NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $5.9 million on the $6.8 million net deferred tax assets related to these foreign NOL carryforwards. Under Section 382 of the Internal Revenue Code, certain ownership changes limit the utilization of the NOL carryforwards, and the amount of federal NOL carryforwards recorded is the net federal benefit available.

Other carryforwards include state research and development (“R&D”) tax credit carryforwards of $23.9 million, the majority of which have an indefinite carryforward period.

A substantial portion of our manufacturing operations in Costa Rica operate under various tax holiday and tax incentive programs due to expire in whole or in part in 2029. Certain of the holidays may be extended if specific conditions are met. The net impact of these tax holiday and tax incentives was an increase to our net earnings by $11.1 million or $0.45 per diluted share in 2024 and by $8.0 million or $0.33 per diluted share in 2023.

Foreign currency translation and derivative instrument adjustments, and related tax effects, are an element of “other comprehensive income” and are not included in net income.

As of December 31, 2024, we have estimated $322 million of undistributed foreign earnings and profits. Such earnings were previously subject to U.S. tax as a result of the Tax Act and much of any future remittances would generally be subject to no U.S. tax as a result of dividends received deductions and/or foreign tax credit relief. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we incur significant additional costs upon repatriation of such amounts.

We are subject to taxation in the U.S. and various states and foreign jurisdictions. Our U.S. federal income tax returns for tax years 2021 and forward are subject to examination by the Internal Revenue Service. Our principal state income tax returns for tax years 2012 and forward are subject to examination by the state tax authorities. The total gross amount of unrecognized tax benefits as of December 31, 2024 was $72.8 million which, if recognized, would impact the effective tax rate. We believe that adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. As of December 31, 2024, it is reasonably possible that the expiration of the U.S. federal statute of limitations will cause the gross amount of unrecognized tax benefits to decrease by $5.2 million within the next twelve months. It is not possible to estimate any other amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We recognized $0.8 million of interest expense and $0.1 million of penalties in income tax benefit during 2024 and released $1.1 million of interest expense and $0.5 million of penalties in 2024. In total, we have accrued for interest and penalties of $2.6 million and $1.6 million, respectively as of December 31, 2024, and $2.9 million and $2.0 million, respectively, as of December 31, 2023.

The following table summarizes our cumulative gross unrecognized tax benefits (in thousands): 

	Year Ended December 31,
	2024		2023		2022
Beginning balance	$	78,558	$	54,053	$	21,537
Increases to prior year tax positions	1,945		2,347		148
Increases due to acquisitions			—		29,606
Increases to current year tax positions	4,441		34,607		4,706
Decreases to prior year tax positions	(406)		(2,455)		(222)
Decrease related to lapse of statute of limitations	(10,062)		(9,591)		(1,722)
Decrease related to settlements with tax authorities	(1,133)		(403)		—
Decrease related to exchange rate fluctuations	(524)		—		—
Ending balance	$	72,819	$	78,558	$	54,053

In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. The Pillar Two legislation is effective for our fiscal year beginning January 1, 2024 and for fiscal year 2024, Pillar 2 did not have a material impact to our tax provision or effective tax rate. However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2024 as we continue to assess the impact of tax legislation in these jurisdictions.