Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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,
	2020			2019		2018
Income (loss) before income taxes:
Canada	$	(2,278	)	$	78	$	(796	)
U.S.		16,875			25,577		39,356
Other		33,806			20,111		22,742
Total	$	48,403		$	45,766	$	61,302

Components of Income Tax Provision (Benefit)

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

	Year Ended December 31,
	2020			2019			2018
Current
Canada	$	82		$	100		$	75
U.S.		1,324			1,109			8,095
Other		6,589			8,116			8,113
		7,995			9,325			16,283
Deferred
Canada		(493	)		—			—
U.S.		(1,256	)		703			(2,272	)
Other		(2,364	)		(5,035	)		(3,804	)
		(4,113	)		(4,332	)		(6,076	)
Total	$	3,882		$	4,993		$	10,207

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,
	2020			2019			2018
Statutory Canadian tax rate		29.00	%		29.00	%		29.00	%
Expected income tax provision at Canadian statutory tax rate	$	14,037		$	13,272		$	17,778
International tax rate differences		(3,483	)		(3,346	)		(4,474	)
U.S. state income taxes, net		(108	)		386			831
Withholding and other taxes		485			364			550
Permanent differences and other		259			443			1,015
Disallowed compensation		685			-			-
Foreign-derived intangible income		(1,063	)		(787	)		(1,628	)
Tax credits		(2,016	)		(1,457	)		(1,250	)
Statutory tax rate changes		429			35			(285	)
Uncertain tax positions		(176	)		310			190
Change in valuation allowance		(727	)		(482	)		(262	)
Acquisition contingent consideration adjustments		(1,513	)		287			833
Transaction costs		(23	)		247			172
Provision to return differences		750			(516	)		(385	)
Windfall benefit from share-based compensation		(2,322	)		(1,717	)		(931	)
UK patent box		(1,332	)		(2,046	)		(1,947	)
Reported income tax provision	$	3,882		$	4,993		$	10,207
Effective tax rate		8.0	%		10.9	%		16.7	%

Significant Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2020 and 2019 are as follows (in thousands):

	December 31,
	2020			2019
Deferred tax assets:
Losses	$	8,524		$	9,484
Operating lease liabilities		10,216		$	8,386
Compensation related deductions		5,955			3,932
Inventories		5,090			4,543
Tax credits		2,958			2,785
Restructuring related liabilities		185			324
Warranty		720			772
Other		957			146
Total deferred tax assets		34,605			30,372
Valuation allowance on deferred tax assets		(11,561	)		(12,302	)
Net deferred tax assets	$	23,044		$	18,070
Deferred tax liabilities:
Depreciation	$	(1,583	)	$	(1,338	)
Amortization		(24,772	)		(26,310	)
Unrealized currency gains/losses		(372	)		(194	)
Operating lease right-of-use assets		(9,960	)	$	(8,014	)
Total deferred tax liabilities	$	(36,687	)	$	(35,856	)
Net deferred income tax assets (liabilities)	$	(13,643	)	$	(17,786	)

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, 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
Additions based on tax positions related to the current year		476
Additions for tax positions of prior years		356
Reductions to tax positions of prior years		(5	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(498	)
Settlements with tax authorities		—
Balance at December 31, 2020	$	5,258

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	2017 - Present
Canada	2017 - Present
United Kingdom	2019 - Present
Germany	2016 - Present
The Netherlands	2014 - Present
China	2011 - Present
Japan	2015 - Present