Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 16 — Income Taxes

The amounts of income (loss) before income taxes attributable to domestic and foreign operations were as follows:

	Year ended December 31,
	2021		2020		2019
	(in thousands)
Domestic	$	23,561	$	(10,292)	$	(78,486)
Foreign		2,119		1,828		530
Total	$	25,680	$	(8,464)	$	(77,956)

Significant components of the expense (benefit) for income taxes consisted of the following:

	Year ended December 31,
	2021		2020		2019
	(in thousands)
Current:
Federal	$	—	$	—	$	—
Foreign		183		22		304
State and local		110		204		113
Total current expense (benefit) for income taxes		293		226		417
Deferred:
Federal		119		136		162
Foreign		(507)		(320)		116
State and local		(263)		(115)		82
Total deferred expense (benefit) for income taxes		(651)		(299)		360
Total expense (benefit) for income taxes	$	(358)	$	(73)	$	777

The income tax expense (benefit) was reconciled to the tax expense computed at the U.S. federal statutory tax rate as follows:

	Year ended December 31,
	2021		2020		2019
	(in thousands)
Income tax expense (benefit) at U.S. statutory rates	$	5,393	$	(1,777)	$	(16,396)
State taxes, net of U.S. federal impact		(607)		(121)		(835)
Effect of international operations		609		(131)		785
Research and development tax credit		(3,964)		726		(1,692)
Net change in valuation allowance		(2,389)		388		15,098
Change in accrual for unrecognized tax benefits		398		(6)		1,232
Share-based compensation		1,208		2,248		1,947
Asset impairment		—		728		495
Partial extinguishment of 2023 Notes		(1,090)		(2,292)		—
Other		84		164		143
Total expense (benefit) for income taxes	$	(358)	$	(73)	$	777

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows:

	December 31,
	2021		2020
	(in thousands)
Deferred tax assets:
Inventory valuation	$	11,822	$	10,949
Net operating losses		38,816		51,260
Credit carry forwards		57,810		54,160
Warranty and installation accruals		1,730		1,045
Share-based compensation		4,033		4,587
Customer deposits and deferred revenue		9,908		10,982
Operating leases		8,464		2,281
Other		5,880		4,741
Total deferred tax assets		138,463		140,005
Valuation allowance		(116,054)		(118,443)
Net deferred tax assets		22,409		21,562
Deferred tax liabilities:
Purchased intangible assets		6,633		7,227
Convertible Senior Notes		10,018		13,674
Operating leases		6,539		2,241
Depreciation		2,372		2,220
Total deferred tax liabilities		25,562		25,362
Net deferred taxes	$	(3,153)	$	(3,800)

The Company is no longer permanently reinvesting future earnings from certain foreign jurisdictions and has accrued for foreign tax withholdings of $0.8 million on its unremitted earnings as of December 31, 2021.

At December 31, 2021, the Company had U.S. federal NOL carryforwards of approximately $165.8 million, of which $6.9 million have an indefinite carryforward period, with the remaining expiring in 2036, if not utilized. At December 31, 2021, the Company had U.S. federal research and development credits of $32.1 million that will expire between 2022 and 2041. The Company also has $9.4 million of foreign tax credits that expire in 2027. Additionally, the Company has state and local NOL carryforwards of approximately $104.7 million (a net deferred tax asset of $6.8 million, net of

federal tax benefits and before the valuation allowance) that will expire between 2022 and 2040. Finally, the Company has state credits of $30.6 million, some of which are indefinite and others that will expire between 2024 and 2036.

The Company makes assessments to estimate if sufficient taxable income will be generated in the future to use existing deferred tax assets. As of December 31, 2021, the Company continued to have a cumulative loss in recent years with respect to its U.S. operations. Based on this negative objective evidence, the Company continues to maintain a valuation allowance against its U.S. deferred tax assets. During 2021, the Company’s valuation allowance decreased by approximately $2.4 million.

A roll-forward of the Company’s uncertain tax positions for all U.S. federal, state, and foreign tax jurisdictions was as follows:

	December 31,
	2021		2020		2019
	(in thousands)
Balance at beginning of year	$	12,363	$	12,369	$	11,137
Additions for tax positions related to current year		2,642		1,217		3,075
Additions for tax positions related to prior years		50		47		21
Reductions for tax positions related to prior years		(1,196)		(1,166)		(1,814)
Reductions due to the lapse of the statute of limitations		—		—		—
Settlements		(1,098)		(104)		(50)
Balance at end of year	$	12,761	$	12,363	$	12,369

If the amount of unrecognized tax benefits at December 31, 2021 were recognized, the Company’s income tax provision would decrease by $0.4 million. The gross amount of interest and penalties accrued in income tax payable in the Consolidated Balance Sheets was approximately $0.4 million at both December 31, 2021 and 2020.

The Company, or one of its subsidiaries, files income tax returns in the United States federal jurisdiction, and various state, local, and foreign jurisdictions. All material consolidated federal income tax matters have been concluded for years through 2017 subject to subsequent utilization of NOLs generated in such years. All material state and local income tax matters have been reviewed through 2012. The majority of the Company’s foreign jurisdictions have been reviewed through 2015. The Company’s major foreign jurisdictions’ statutes of limitation remain open with respect to the tax years 2015 through 2020 for Germany, 2017 through 2020 for China, and 2020 for Taiwan and Singapore. The Company does not anticipate that its uncertain tax position will change significantly within the next twelve months subject to the completion of the ongoing tax audits and any resultant settlement.