Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 — Income Taxes

We and our subsidiaries file a consolidated U.S. federal income tax return. We believe that our recorded deferred tax assets and liabilities are reasonable. However, tax laws and regulations are subject to interpretation, and the outcomes of tax disputes are inherently uncertain; therefore, our assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions.

Components of income tax provision (benefit) reflected in the consolidated statements of operations consist of the following (in thousands): 

	Year Ended December 31,
	2020		2019		2018
Current	$	(14,818)	$	4,374	$	4,830
Deferred	(3,883)		3,485		(2,430)
	$	(18,701)	$	7,859	$	2,400

Domestic	$	(15,074)	$	3,715	$	(3,161)
Foreign	(3,627)		4,144		5,561
	$	(18,701)	$	7,859	$	2,400

Components of income (loss) before income taxes are as follows (in thousands): 

	Year Ended December 31,
	2020		2019		2018
Domestic	$	(3,406)	$	2,219	$	(28,838)
Foreign	4,789		63,337		59,836
	$	1,383	$	65,556	$	30,998

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S. income tax regulations. The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year. As a result of these changes, we recognized a $7.6 million net tax benefit in the year ended December 31, 2020, consisting of an $18.9 million current tax benefit, which is reflected in our income tax receivable at December 31, 2020, and a $11.3 million deferred tax expense. This $7.6 million net tax benefit resulted from our deferred tax assets related to our net operating losses in the U.S. being utilized at the previous higher income tax rate applicable to the carryback periods.

During the year ended December 31, 2020, we migrated two of our foreign subsidiaries into our U.S. consolidated tax group. Subsequent to the migration, these subsidiaries are disregarded and no longer subject to certain branch profits taxes. Consequently, we recognized net deferred tax benefits of $8.3 million due to the reduction in the overall tax rate associated with these subsidiaries.

Income taxes are provided based on the U.S. statutory rate and at the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes. The primary differences between the income tax provision (benefit) at the U.S. statutory rate and our actual income tax provision (benefit) are as follows: 

	Year Ended December 31,
	2020				2019				2018
Taxes at U.S. statutory rate	$	290	21.0	%	$	13,767	21.0	%	$	6,510	21.0	%
Foreign tax provision	(3,426)		(247.7)		(6,557)		(10.0)		(4,941)		(15.9)
CARES Act	(7,596)		(549.2)		—		—		—		—
Subsidiary restructuring	(8,333)		(602.5)		—		—		—		—
Other	364		26.2		649		1.0		831		2.6
Income tax provision (benefit)	$	(18,701)	(1,352.2)	%	$	7,859	12.0	%	$	2,400	7.7	%

Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The nature of these differences and the income tax effect of each are as follows (in thousands): 

	December 31,
	2020		2019
Deferred tax liabilities:
Depreciation	$	153,226	$	166,239
Debt discounts on 2022 Notes, 2023 Notes and 2026 Notes	9,298		4,643
Total deferred tax liabilities	$	162,524	$	170,882
Deferred tax assets:
Net operating losses	$	(59,794)	$	(64,178)
Reserves, accrued liabilities and other	(11,631)		(13,203)
Total deferred tax assets	(71,425)		(77,381)
Valuation allowance	19,722		18,631
Net deferred tax liabilities	$	110,821	$	112,132

At December 31, 2020, our U.S. net operating losses available for carryforward totaled $197.4 million, of which $85.1 million occurred after the passage of the 2017 Tax Act and are not subject to expiration. The U.S. net operating loss carryforwards generated prior to 2018 in the amount of $112.3 million will begin to expire in 2035 if unused. Realization of net operating losses is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of these tax attributes will be utilized. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carryforward period are reduced.

At December 31, 2020, we had a $2.9 million valuation allowance recorded against our U.S. deferred tax assets for foreign tax credits. Management believes it is more likely than not that we will not be able to utilize the foreign tax credits prior to their expiration.

At December 31, 2020, we had a $16.8 million valuation allowance related to certain non-U.S. deferred tax assets, primarily net operating losses from our Robotics segment in the U.K., as management believes it is more likely than not that we will not be able to utilize the tax benefits. Additional valuation allowances may be made in the future if in management’s opinion it is more likely than not that future tax benefits will not be utilized.

At December 31, 2020, we had accumulated undistributed earnings generated by our non-U.S. subsidiaries without operations in the U.S. of approximately $62.2 million. Due to the enactment of the U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”), repatriations of foreign earnings will generally be free of U.S. federal tax but may be subject to changes in future tax legislation that may result in taxation. Indefinite reinvestment is determined by management’s intentions concerning our future operations. We intend to indefinitely reinvest these earnings, as well as future earnings from our non-U.S. subsidiaries without operations in the U.S., to fund our international operations. In addition, we expect future U.S. cash generation will be sufficient to meet future U.S. cash needs. We have not provided deferred income taxes on the accumulated earnings and profits from our non-U.S. subsidiaries without operations in the U.S. as we consider them permanently reinvested. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes associated with these undistributed earnings.

We recorded an uncertain tax position of $0.7 million in 2020 related to a research and development credit taken on our 2019 U.S. Federal Income Tax Return and certain expenses not reversed for tax purposes. We account for tax-related interest in interest expense and tax penalties in selling, general and administrative expenses. We did not record any interest related to these positions in 2020 as the amount was immaterial. The statute of limitations on $0.3 million of uncertain tax positions expired in 2019. Therefore, as of December 31, 2019, there were no unrecognized tax benefits related to uncertain tax positions.

We file tax returns in the U.S. and in various state, local and non-U.S. jurisdictions. We anticipate that any potential adjustments to our state, local and non-U.S. jurisdiction tax returns by taxing authorities would not have a material impact on our financial position. The tax periods from 2013, 2014, and 2018 through 2020 remain open to review and examination by the Internal Revenue Service. In non-U.S. jurisdictions, the open tax periods include 2013 through 2020.