Income Tax

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax

11.  INCOME TAXES

The components of income before income tax expense for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019		2018		2017
United States	$	61,374	$	61,680	$	28,632
Other countries		20,620		43,614		70,602
Income before income tax expense	$	81,994	$	105,294	$	99,234

The components of income tax expense for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019			2018			2017
Current:
United States	$	8,786		$	13,198		$	10,699
Other countries		13,267			10,132			9,147
State and provincial		(28	)		1,548			725
Total current		22,025			24,878			20,571
Deferred:
United States	$	(57,250	)	$	(1,340	)	$	(2,948	)
Other countries		23,558			1,909			626
State and provincial		(623	)		—			—
Total deferred		(34,315	)		569			(2,322	)
Income tax expense (benefit)	$	(12,290	)	$	25,447		$	18,249

The differences in income tax expense computed using the Netherlands statutory income tax rate of 25% and our income tax expense (benefit) as reported in the accompanying Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019			2018			2017
Tax at the Netherlands income tax rate	$	22,895		$	26,189		$	25,427
International earnings taxed at rates other than the    Netherlands statutory rate		(1,343	)		(14,997	)		(12,496	)
Non-deductible expenses		3,516			4,452			6,645
Change in valuation allowance		(3,491	)		1,513			(1,744	)
State and provincial taxes		(825	)		1,566			829
Tax credits		(3,893	)		(3,939	)		218
Benefit from corporate restructuring		(59,336	)		—			—
Unremitted earnings of subsidiaries		26,126			—			—
Adjustments of prior year taxes		(1,684	)		2,350			(4,272	)
Adjustments of income tax reserves		1,084			(1,613	)		1,869
Foreign exchange		2,014			5,936			(1,792	)
Accrued withholding taxes		2,603			2,911			3,067
Other		44			1,079			498
Income tax expense (benefit)	$	(12,290	)	$	25,447		$	18,249

Deferred tax assets and liabilities result from various temporary differences between the financial statement carrying amount and their tax basis. Deferred tax assets and liabilities as of December 31, 2019 and 2018 are summarized as follows (in thousands):

	2019			2018
Deferred tax assets:
Net operating loss carry-forwards	$	7,209		$	6,300
Tax credit carry-forwards		1,888			1,154
Accruals for compensation		8,240			7,160
Accruals for inventory capitalization		1,788			1,813
Unrealized benefit from corporate restructuring		56,985			—
Unrealized benefit plan loss		3,740			3,417
Unrealized foreign exchange		3,842			7,542
Unearned revenue		1,849			2,760
Other		1,839			822
Total deferred tax assets		87,380			30,968
Valuation allowance (1)		(6,241	)		(9,732	)
Net deferred tax assets		81,139			21,236
Deferred tax liabilities:
Intangibles		(6,263	)		(6,025	)
Property, plant and equipment		(3,546	)		(2,835	)
Accrued interest		(1,679	)		(3,260	)
Accrued withholding taxes		(26,718	)		(886	)
Unrealized foreign exchange		(2,653	)		(4,043	)
Other		(306	)		(569	)
Total deferred tax liabilities		(41,165	)		(17,618	)
Net deferred income taxes	$	39,974		$	3,618
(1) Valuation allowance at 12/31/17 was 8.2 million.

	2019			2018
Long-term deferred tax assets	$	67,312		$	11,252
Long-term deferred tax liabilities		(27,338	)		(7,634	)
Total deferred tax assets (liabilities)	$	39,974		$	3,618

In 2019, we completed a corporate restructuring transaction which resulted in a net tax benefit of $60.7 million, and recognized tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested. We have not provided for deferred taxes on the unremitted earnings of certain subsidiaries that we consider to be indefinitely reinvested. Should we make a distribution of the unremitted earnings of these subsidiaries, we may

be required to record additional taxes. As of December 31, 2019, we consider $4.3 million to be indefinitely reinvested. Repatriation of these earnings would be subject to income and withholding taxes estimated at less than $0.1 million. There are no restrictions preventing any of our subsidiaries from repatriating earnings, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances.

At December 31, 2019, we had tax net operating loss carry-forwards in various tax jurisdictions of $31.9 million. Although we cannot be certain that these operating loss carry-forwards will be utilized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize the carry-forwards that are not subject to a valuation allowance. As of December 31, 2019, if unused, $12.4 million will expire between 2020 and 2022, $3.2 million will expire between 2023 and 2025, $2.8 million will expire between 2026 and 2029 and $0.2 million will expire beyond 2029. The remaining balance of $13.3 million is not subject to expiration. During 2019, less than $0.5 million of net operating loss carry-forwards, which carried a full valuation allowance, expired unused.

We file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. We are currently undergoing multiple examinations in various jurisdictions, and the years 2001 through 2018 remain open for examination in various tax jurisdictions in which we operate. The ultimate settlement and timing of these additional tax assessments is uncertain but the Company will continue to vigorously defend its return filing position and does not view the assessments as probable at this time.

During 2019, adjustments were made to estimates for uncertain tax positions in certain tax jurisdictions based upon changes in facts and circumstances, resulting in a reduction to the unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2019			2018			2017
Unrecognized tax benefits at January 1,	$	7,471		$	10,124		$	8,557
Tax positions, current period		495			543			3,472
Tax positions, prior period		(361	)		(304	)		180
Settlements with taxing authorities		(18	)		(2,207	)		(1,154	)
Lapse of applicable statute of limitations		(286	)		(685	)		(931	)
Unrecognized tax benefits at December 31,	$	7,301		$	7,471		$	10,124

Changes in our estimate of, or the recognition of, the unrecognized tax benefits shown in the table above would affect our effective tax rate.

Our policy is to record accrued interest and penalties on uncertain tax positions, net of any tax effect, as part of total tax expense for the period. The corresponding liability is carried along with the tax exposure as a non-current payable in Other Long-term Liabilities. For the years ended December 31, 2019, 2018 and 2017, we recognized $1.3 million, $0.6 million and $0.6 million, respectively, in interest and penalties. For the years ended December 31, 2019, 2018 and 2017, we had $5.1 million, $3.9 million and $3.3 million, respectively, accrued for the payment of interest and penalties. Changes in our estimate of unrecognized tax benefits would affect our effective tax rate. As of December 31, 2019, 2018 and 2017 there are $0.9 million, $0.6 million and $1.8 million, respectively, of unrecognized tax benefits that could be resolved within the next twelve months which could have a positive effect on the annual effective tax rate.