Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before income taxes was generated in the following jurisdictions:

	Years Ended December 31,
	2022		2021		2020
(In thousands)
U.S.	$	(9,569)	$	(15,056)	$	1,046
Non-U.S.	(2,124)		(11,087)		(4,466)
Total	$	(11,693)	$	(26,143)	$	(3,420)

For the years ended December 31, 2022, 2021, and 2020, domestic income excludes intercompany dividend income of $0 million, $0 million, and $38.0 million, respectively. The provision (benefit) for income taxes consists of the following:

	Years Ended December 31,
	2022		2021		2020
(In thousands)
Current:
Federal	$	122	$	(11)	$	1,715
State	32		(23)		49
Foreign	1,665		2,478		1,758
Total current	1,819		2,444		3,522
Deferred:
Federal	(349)		3,774		1,385
State	35		(3)		(24)
Foreign	1,236		(1,774)		(2,848)
Total deferred	922		1,997		(1,487)
Total	$	2,741	$	4,441	$	2,035

For 2022, 2021, and 2020, the Company's U.S. federal statutory rate was 21%. The differences between the income tax provisions computed using the statutory federal income tax rate and the provisions for income taxes reported in the consolidated statements of operations are as follows:

	Years Ended December 31,
	2022		2021		2020
(In thousands)
Expected tax at statutory rate	$	(2,456)	$	(5,490)	$	(718)
Foreign taxes at other rates	3,373		307		(309)
Valuation allowance changes	4,370		15,019		2,617
Global intangible low-taxed income inclusion	—		—		339
State income taxes, net of federal benefit	(322)		(811)		32
Uncertain tax positions	(515)		12		235
Research credits	(2,568)		(3,466)		(1,029)
Disallowed expenses and other	859		(1,130)		868
Total	$	2,741	$	4,441	$	2,035

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2022 and 2021, are as follows:

	December 31,
	2022		2021
(In thousands)
Deferred tax assets:
Stock and long-term compensation plans	$	923	$	1,337
Foreign NOL & other carryforwards	41,154		38,153
US and state NOL carryforwards	5,654		5,539
Deferred revenue	863		2,068
Pension liability	498		1,547
Amortization and depreciation	526		257
Lease liability	2,641		3,171
Capitalized research and development	487		—
Accrued expenses and other	1,427		1,157
Total gross deferred tax assets	54,173		53,229
Less: Valuation allowance	(39,177)		(34,979)
Net deferred income tax assets	$	14,996	$	18,250
Deferred tax liabilities:
Accruals	$	319	$	231
Tax on unremitted foreign earnings	1,249		1,357
Right of use asset	2,531		2,872
Intangible assets	3,009		5,225
Tax on credits	3,736		3,439
Contract acquisition costs	3,448		2,626
Deferred tax liabilities	$	14,292	$	15,750
Net deferred tax assets	$	704	$	2,500

Deferred tax assets and liabilities are netted by tax jurisdiction.

At December 31, 2022, the Company had foreign and state net operating loss (NOL) carryforwards and other foreign deductible carryforwards as shown in the following table:

	Carryforward		Expiration
(In thousands)
NOL Carryforward
Canada	$	24,804	2034-2039
United States	17,989		None
United Kingdom	9,569		None
Switzerland	14,319		2028-2029
Other foreign	5,886		None
Canada province	25,502		2034-2039
U.S. states	27,680		2023-2042
	$	125,749
Other Carryforwards
United States credit	$	828	2032
Canada	47,526		None
Canada province	61,657		None
Capital loss	383		None
Canada credits	9,809		2025-2042
Canada province credits	3,980		2036-2042
	$	124,183
	$	249,932

The valuation allowance against the net deferred tax assets as of December 31, 2022 and 2021 was $39.2 million and $35.0 million, respectively.

The Company recorded changes in valuation allowance of $4.4 million and $15.0 million, during the years ended December 31, 2022 and 2021, respectively, against deferred tax assets that, based on the Company's assessment are considered not to be more likely than not to be realized. The increase in the valuation allowance in 2022 reflects Net Operating Losses (“NOLs”), other deduction carryforwards, and credits for which the realization is not more likely than not. The change in valuation allowance also reflects other factors including, but not limited to, changes in the Company's assessment of the ability to use existing deferred tax assets, including NOLs and other deduction carryforwards.

The Company assesses the need for a valuation allowance on a regular basis, weighing all positive and negative evidence to determine whether a deferred tax asset will be fully or partially realized. In evaluating the realizability of deferred tax assets, significant pieces of negative evidence such as 3-year cumulative losses are considered. The Company also reviewed reversal patterns of temporary differences to determine if the Company would have sufficient taxable income due to the reversal of temporary differences to support the realization of deferred tax assets. In 2022 and 2021, the Company made the decision to establish a valuation allowance against certain deferred tax assets in jurisdictions that were not previously valued as the deferred tax assets were no longer more likely than not to be realized. The Company continues to maintain a valuation allowance against certain deferred tax assets in other jurisdictions where assets had been previously valued. For all other remaining deferred tax assets, the Company believes it is still more likely than not that the results of future operations or tax planning strategies will generate sufficient taxable income to realize the deferred tax assets.

The Company's policy is to record interest and penalties on income taxes as income tax expense, It recorded expense of less than $0.1 million in 2022 and 2021, and $0.1 million during 2020.

ASC 740, Income Taxes sets a “more-likely-than-not” criterion for recognizing the tax benefit of uncertain tax positions. As of December 31, 2022, 2021, and 2020, the Company had reserves of $0 million, $0.5 million, and $0.5 million, respectively.

	December 31,
	2022		2021		2020
(In thousands)
Reserve at beginning of year	$	512	$	500	$	2,923
Increases related to prior year tax positions	—		12		277
Decreases related to prior year tax positions	(512)		—		(37)
Settlement	—		—		(2,663)
Total	$	—	$	512	$	500

The Company files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions, and is subject to examination of its income tax returns by the IRS and other tax authorities. The Company reduced an uncertain tax position in the U.S. upon filing of an accounting method change and receiving audit protection.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with the Company's expectations, there could be a requirement to adjust the provision for income taxes in the period such resolution occurs. Included in the balance of unrecognized tax benefits as of December 31, 2022 is $0, of tax benefits that, if recognized, would affect the effective tax rate.

The Company's primary tax jurisdictions and the earliest tax year subject to audit are presented in the following table.

Australia	2014
Austria	2016
Belgium	2018
Canada	2018
Netherlands	2017
Singapore	2017
Switzerland	2020
United Kingdom	2020
United States	2017