Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

Note 8.         Income Taxes

The components of income (loss) before income taxes were as follows:

	Year Ended December 31,
	2020		2019		2018
United States	$	55,874	$	13,830	$	(52,473)
Foreign		(2,234)		(878)		(927)
Total Income (Loss) before Income Taxes	$	53,640	$	12,952	$	(53,400)

The (benefit) expense for income taxes consisted of the following:

	Year Ended December 31,
	2020		2019		2018
Current
Federal	$	1,868	$	2,550	$	—
State		2,315		1,015		607
Foreign		67		90		132
Total Current		4,250		3,655		739
Deferred
Federal		(9,671)		(203)		140
State		(2,366)		(163)		100
Total Deferred		(12,037)		(366)		240
Income Tax (Benefit) Expense	$	(7,787)	$	3,289	$	979

Tax expense in the amount of $0.8 million and $0.5 million was recognized as a component of income tax expense during 2020 and 2019, respectively, resulting from the exercise of stock options and the release of restricted shares.

	Year Ended December 31,
	2020				2019				2018
Income Tax Expense (Benefit) at Federal Statutory Rate	$	11,264	21.0	%	$	2,720	21.0	%	$	(11,214)	21.0	%
Increases (Decreases):
State Income Taxes, Net of Federal Income Tax Benefit		1,949	3.6	%		425	3.3	%		723	(1.3)	%
Valuation Allowance		(21,363)	(39.8)	%		668	5.2	%		3,897	(7.3)	%
Foreign Operations		2,431	4.5	%		90	0.7	%		132	(0.3)	%
Uncertain Tax Positions		—	—	%		174	1.3	%		2,919	(5.5)	%
Non-Deductible Fines and Penalties		2	—	%		6	—	%		4,011	(7.5)	%
CARES Act Rate Differential		(1,751)	(3.3)	%		—	—	%		—	—	%
Other		(319)	(0.5)	%		(794)	(6.1)	%		511	(0.9)	%
Income Tax (Benefit) Expense	$	(7,787)	(14.5)	%	$	3,289	25.4	%	$	979	(1.8)	%

The tax effects of temporary differences that result in significant portions of the deferred tax accounts based on a 21% federal rate in both 2020 and 2019, are as follows:

	December 31,
	2020		2019
Deferred Tax Liabilities:
Operating Lease Right-of-Use Assets	$	(28,579)	$	(31,804)
Depreciation and Amortization and Other		(14,532)		(9,676)
Total Gross Deferred Tax Liabilities		(43,111)		(41,480)
Deferred Tax Assets:
Operating Lease Liabilities		31,365		34,419
Stock-Based Compensation Expense		2,155		2,611
Legal Settlement Reserves		7,998		11,774
Other Accruals and Reserves		4,718		5,054
Employee Benefits		3,616		1,169
Inventory Reserves		1,241		1,311
Inventory Capitalization		2,790		3,194
Foreign Net Operating Loss Carryforwards		2,674		3,341
Net Operating Loss Carryforwards		250		2,444
Capital Loss Carryforwards and Other		3,538		2,723
Total Gross Deferred Tax Assets		60,345		68,040
Less: Valuation Allowance		(5,623)		(26,986)
Total Deferred Tax Assets		54,722		41,054
Net Deferred Tax Asset (Liability)	$	11,611	$	(426)

The Company continues to monitor developments by federal and state rulemaking authorities regarding tax law changes and recognizes the impact of these law changes in the period in which they are enacted.

As of December 31, 2019, the Company had a full valuation allowance of $27 million recorded against its net deferred assets as the Company was in a consolidated cumulative three-year loss position, and the Company was not relying upon projections of future taxable income in assessing their recoverability.  The Company assesses the available evidence on a quarterly basis to assess if, based on the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.  The Company was no longer in a consolidated cumulative three-year loss position at December 31, 2020.  Based on the Company’s evaluation at a jurisdictional level as of December 31, 2020, the Company released valuation allowances of $20 million in the fourth quarter of 2020 in jurisdictions where the Company believes sufficient future taxable income, including consideration of future performance, market or economic conditions, will be generated to use existing deferred tax assets.  This release of the valuation allowance resulted in noncash income tax benefit in the fourth quarter of 2020 of $20 million. At December 31, 2020 the Company’s remaining valuation allowance was $5.6 million including the release of the valuation allowance and a $1.7 million adjustment to valuation allowances associated with deferred taxes for foreign operations. The amount of the deferred tax assets considered realizable could be adjusted in future periods if evidence warrants such a change.

As of December 31, 2020 and 2019, the Company had no remaining U.S. federal net operating loss carryforward. As of December 31, 2020 and 2019, respectively, the Company had state net loss carryforwards of $4 million and $39 million, which begin to expire in 2025. The Company had foreign net operating loss carryforwards of $14 million and $12 million at December 31, 2020 and 2019, respectively, which begin to expire in 2030.

The Company paid income taxes (net of refunds) of $10 million and $0.2 million in 2020 and 2019, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company amended its 2018 tax return with respect to CARES Act items and carried the 2018 NOL back to 2013 resulting in a cash tax refund of $5 million, received in the third quarter 2020. 

As of December 31, 2020 and 2019, the Company had $0.2 million of gross unrecognized tax benefits related to Uncertain Tax Positions ($0.2 million net of federal tax benefit). It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the uncertain tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change in uncertain tax positions to have a significant effect on its results of operations, financial position or cash flows.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, is as follows:

	Year Ended December 31,
	2020		2019
Balance at beginning of year	$	225	$	3,610
Increase for tax positions related to current year		—		174
Decrease for tax positions related to prior years		—		(3,443)
Settlements		—		(116)
Balance at end of year	$	225	$	225

The Company files income tax returns with the U.S. federal government and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities.   As of December 31, 2020, the Internal Revenue Service has completed audits of the Company’s income tax returns through 2016.