Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Components of Income (Loss) Before Income Tax

Components of the Company’s income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2019		2018			2017
Income (loss) before income taxes:
Canada	$	78	$	(796	)	$	(2,036	)
U.S.		25,577		39,356			37,327
Other		20,111		22,742			40,843
Total	$	45,766	$	61,302		$	76,134

Components of Income Tax Provision (Benefit)

Components of the Company’s income tax provision (benefit) are as follows (in thousands):

	Year Ended December 31,
	2019			2018			2017
Current
Canada	$	100		$	75		$	146
U.S.		1,109			8,095			9,434
Other		8,116			8,113			6,807
		9,325			16,283			16,387
Deferred
Canada		—			—			—
U.S.		703			(2,272	)		2,396
Other		(5,035	)		(3,804	)		(4,956	)
		(4,332	)		(6,076	)		(2,560	)
Total	$	4,993		$	10,207		$	13,827

Reconciliation of Statutory Canadian Tax rate to Effective Tax Rate

The reconciliation of the statutory Canadian tax rate to the effective tax rate related to income before income taxes is as follows (in thousands, except percentage data):

	Year Ended December 31,
	2019			2018			2017
Statutory Canadian tax rate		29.00	%		29.00	%		29.00	%
Expected income tax provision at Canadian statutory tax rate	$	13,272		$	17,778		$	22,079
International tax rate differences		(3,346	)		(4,474	)		(2,038	)
U.S. state income taxes, net of federal benefits		386			831			674
Withholding and other taxes		364			550			484
Permanent differences and other		443			1,015			1,582
Section 199 deduction		—			—			(1,148	)
Foreign-derived intangible income		(787	)		(1,628	)		—
Tax credits		(1,457	)		(1,250	)		(984	)
Statutory tax rate changes		35			(285	)		2,823
Uncertain tax positions		310			190			(1,607	)
Change in valuation allowance		(482	)		(262	)		(354	)
Acquisition contingent consideration adjustments		287			833			149
Transaction costs		247			172			1,011
Provision to return differences		(516	)		(385	)		225
Windfall benefit from share-based compensation		(1,717	)		(931	)		(837	)
Gain on Laser Quantum acquisition		—			—			(6,586	)
U.K. patent box		(2,046	)		(1,947	)		(1,646	)
Reported income tax provision	$	4,993		$	10,207		$	13,827
Effective tax rate		10.9	%		16.7	%		18.2	%

Significant Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Losses	$	9,484		$	9,385
Operating lease liabilities		8,386			—
Compensation related deductions		3,932			4,780
Inventories		4,543			4,170
Tax credits		2,785			2,785
Restructuring related liabilities		324			202
Warranty		772			35
Other		146			885
Total deferred tax assets		30,372			22,242
Valuation allowance on deferred tax assets		(12,302	)		(12,884	)
Net deferred tax assets	$	18,070		$	9,358
Deferred tax liabilities:
Depreciation	$	(1,338	)	$	(1,867	)
Amortization		(26,310	)		(20,258	)
Unrealized currency gains/losses		(194	)		(373	)
Operating lease right-of-use assets		(8,014	)		—
Total deferred tax liabilities	$	(35,856	)	$	(22,498	)
Net deferred income tax assets (liabilities)	$	(17,786	)	$	(13,140	)

Reconciliation of Total Amounts of Unrecognized Tax Benefits

The reconciliation of the total amounts of unrecognized tax benefits is as follows (in thousands):

Balance at December 31, 2016	$	4,962
Additions based on tax positions related to the current year		991
Additions for tax positions of prior years		496
Reductions to tax positions of prior years		(28	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(1,577	)
Settlements with tax authorities		(755	)
Balance at December 31, 2017		4,089
Additions based on tax positions related to the current year		394
Additions for tax positions of prior years		655
Reductions to tax positions of prior years		(69	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(239	)
Settlements with tax authorities		(105	)
Balance at December 31, 2018		4,725
Additions based on tax positions related to the current year		727
Additions for tax positions of prior years		5
Reductions to tax positions of prior years		(31	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(497	)
Settlements with tax authorities		—
Balance at December 31, 2019	$	4,929

Income Tax Returns to be Reviewed

The Company’s income tax returns may be reviewed by tax authorities in the following countries for the following periods under the appropriate statute of limitations:

United States	2016 - Present
Canada	2016 - Present
United Kingdom	2018 - Present
Germany	2015 - Present
The Netherlands	2013 - Present
China	2010 - Present
Japan	2014 - Present