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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,
202220212020
(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,
202220212020
(In thousands)
Current:
Federal$122 $(11)$1,715 
State32 (23)49 
Foreign1,665 2,478 1,758 
Total current1,819 2,444 3,522 
Deferred:
Federal(349)3,774 1,385 
State35 (3)(24)
Foreign1,236 (1,774)(2,848)
Total deferred922 1,997 (1,487)
Total$2,741 $4,441 $2,035 
For 2022, 2021, and 2020, the Company's U.S. federal statutory rate was 21%. The differences between the income tax provisions computed using the statutory federal income tax rate and the provisions for income taxes reported in the consolidated statements of operations are as follows:
Years Ended December 31,
202220212020
(In thousands)
Expected tax at statutory rate$(2,456)$(5,490)$(718)
Foreign taxes at other rates3,373 307 (309)
Valuation allowance changes4,370 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 other859 (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,
20222021
(In thousands)
Deferred tax assets:
Stock and long-term compensation plans$923 $1,337 
Foreign NOL & other carryforwards41,154 38,153 
US and state NOL carryforwards5,654 5,539 
Deferred revenue863 2,068 
Pension liability498 1,547 
Amortization and depreciation526 257 
Lease liability2,641 3,171 
Capitalized research and development487 — 
Accrued expenses and other1,427 1,157 
Total gross deferred tax assets54,173 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 earnings1,249 1,357 
Right of use asset2,531 2,872 
Intangible assets3,009 5,225 
Tax on credits3,736 3,439 
Contract acquisition costs3,448 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:
CarryforwardExpiration
(In thousands)
NOL Carryforward
Canada$24,804 
2034-2039
United States17,989 None
United Kingdom9,569 None
Switzerland14,319 
2028-2029
Other foreign5,886 None
Canada province25,502 
2034-2039
U.S. states27,680 
2023-2042
$125,749 
Other Carryforwards
United States credit$828 2032
Canada47,526 None
Canada province61,657 None
Capital loss383 None
Canada credits9,809 
2025-2042
Canada province credits3,980 
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,
202220212020
(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.
Australia2014
Austria2016
Belgium2018
Canada2018
Netherlands2017
Singapore2017
Switzerland2020
United Kingdom2020
United States2017