Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

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,
	2021			2020			2019
Income (loss) before income taxes:
Canada	$	(1,371	)	$	(2,278	)	$	78
U.S.		19,168			16,875			25,577
Other		38,375			33,806			20,111
Total	$	56,172		$	48,403		$	45,766

Components of Income Tax Provision (Benefit)

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

	Year Ended December 31,
	2021			2020			2019
Current
Canada	$	95		$	82		$	100
U.S.		205			1,324			1,109
Other		9,486			6,589			8,116
		9,786			7,995			9,325
Deferred
Canada		493			(493	)		—
U.S.		(2,133	)		(1,256	)		703
Other		(2,305	)		(2,364	)		(5,035	)
		(3,945	)		(4,113	)		(4,332	)
Total	$	5,841		$	3,882		$	4,993

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,
	2021			2020			2019
Statutory Canadian tax rate		29.00	%		29.00	%		29.00	%
Expected income tax provision at Canadian statutory tax rate	$	16,291		$	14,037		$	13,272
International tax rate differences		(3,621	)		(3,483	)		(3,346	)
U.S. state income taxes, net		(249	)		(108	)		386
Withholding and other taxes		429			485			364
Permanent differences and other		921			259			443
Disallowed compensation		1,111			685			-
Foreign-derived intangible income		(1,211	)		(1,063	)		(787	)
Tax credits		(1,408	)		(2,016	)		(1,457	)
Statutory tax rate changes		489			429			35
Uncertain tax positions		(472	)		(176	)		310
Change in valuation allowance		918			(727	)		(482	)
Acquisition contingent consideration adjustments		87			(1,513	)		287
Transaction costs		248			(23	)		247
Provision to return differences		33			750			(516	)
Windfall benefit from share-based compensation		(5,131	)		(2,322	)		(1,717	)
UK patent box		(2,594	)		(1,332	)		(2,046	)
Reported income tax provision	$	5,841		$	3,882		$	4,993
Effective tax rate		10.4	%		8.0	%		10.9	%

Significant Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows (in thousands):

	December 31,
	2021			2020
Deferred tax assets:
Losses	$	9,358		$	8,524
Operating lease liabilities		12,200			10,216
Compensation related deductions		6,795			5,955
Inventories		6,594			5,090
Tax credits		2,786			2,958
Restructuring related liabilities		206			185
Warranty		700			720
Other		197			957
Total deferred tax assets		38,836			34,605
Valuation allowance on deferred tax assets		(12,608	)		(11,561	)
Net deferred tax assets	$	26,228		$	23,044
Deferred tax liabilities:
Depreciation	$	(2,585	)	$	(1,583	)
Amortization		(32,117	)		(24,772	)
Unrealized currency gains/losses		-			(372	)
Operating lease right-of-use assets		(11,667	)		(9,960	)
Deferred revenue		(1,391	)		—
Total deferred tax liabilities	$	(47,760	)	$	(36,687	)
Net deferred income tax assets (liabilities)	$	(21,532	)	$	(13,643	)

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, 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
Additions based on tax positions related to the current year		1,162
Additions for tax positions of prior years		9
Reductions to tax positions of prior years		(41	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(1,591	)
Settlements with tax authorities		—
Balance at December 31, 2021	$	4,797

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	2018 - Present
Canada	2017 - Present
United Kingdom	2020 - Present
Germany	2017 - Present
The Netherlands	2017 - Present
China	2012 - Present
Japan	2016 - Present