Income Taxes:

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Income from continuing operations before taxes consisted of the following (in thousands): 

	Year Ended December 31,
	2020		2019		2018
United States	$	41,194	$	32,849	$	(8,600)
Foreign	56,300		81,858		30,974
	$	97,494	$	114,707	$	22,374

    The provision (benefit) for income taxes consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	6,032	$	6,851	$	492
State	2,422		2,532		1,865
Foreign	7,290		7,994		9,136
	15,744		17,377		11,493
Deferred:
Federal	$	(5,319)	$	(6,720)	$	(9,118)
State	(1,850)		(325)		(3,072)
Foreign	2,049		3,340		(5,722)
	(5,120)		(3,705)		(17,912)
	$	10,624	$	13,672	$	(6,419)

We have accrued for tax contingencies for potential tax assessments, and in 2020 we recognized a $3.2 million net increase, most of which related to various federal, state and foreign tax reserves.

     A reconciliation of the provision for income taxes at the statutory rate to our effective tax rate is as follows (dollars in thousands):

	Year Ended December 31,
	2020				2019				2018
	Amount		Percent		Amount		Percent		Amount		Percent
Federal tax at the expected statutory rate	$	20,474	21.0	%	$	24,088	21.0	%	$	4,699	21.0	%
State income tax, net of federal effect	2,099		2.2	%	1,269		1.1	%	927		4.1	%
Tax credits	(3,269)		(3.4)	%	(2,896)		(2.5)	%	(4,961)		(22.2)	%
Global intangible low-taxed income	(2,555)		(2.6)	%	6,118		5.3	%	2,363		10.6	%
Foreign income tax differential	(3,888)		(4.0)	%	(5,939)		(5.2)	%	(2,944)		(13.2)	%
Stock based compensation	(4,686)		(4.8)	%	(8,446)		(7.4)	%	(11,040)		(49.3)	%
Impact of the Tax Act	—		—	%	—		—	%	826		3.7	%
IP installment sale and repatriation	—		—	%	(2,118)		(1.8)	%	3,252		14.5	%
Contingent consideration	1,566		1.6	%	—		—	%	—		—	%
Section 162(m)	1,079		1.1	%	203		0.2	%	456		2.0	%
Other	(196)		(0.2)	%	1,393		1.2	%	3		0.1	%
	$	10,624	10.9	%	$	13,672	11.9	%	$	(6,419)	(28.7)	%

Tax credits in 2020, 2019 and 2018 consist principally of research and developmental tax credits. 

    Certain intellectual property and assets were repatriated in 2019 from a liquidation of foreign subsidiaries to the U.S. parent. The tax effect of the repatriation is included as IP installment sale and repatriation.

    The components of our deferred income tax assets (liabilities) are as follows (in thousands):

	As of December 31,
	2020		2019
Deferred tax asset:
Accruals/other	$	5,668	$	2,632
Acquired future tax deductions	7,781		8,711
Stock-based compensation	7,138		9,654
Foreign currency translation adjustments	2,406		2,716
Tax credits	12,444		11,331
Inventory reserves	8,493		4,305
Allowance for doubtful accounts	4,460		4,242
Accrued restructuring	1,293		7,072
Chargebacks, discounts, customer concessions	22,874		20,975
Valuation allowance	(3,891)		(3,677)
	$	68,666	$	67,961
Deferred tax liability:
State income taxes	$	2,398	$	2,600
Foreign	776		997
Depreciation and amortization	26,375		23,839
Section 481(a) adjustment - change in accounting method	9,746		14,618
	$	39,295	$	42,054
Deferred tax asset, net	$	29,371	$	25,907

Tax Holidays and Carryforwards

    Net operating loss ("NOL") carryforwards consist of: (a) federal NOL carryforwards of $7.0 million which will expire at various dates from 2023 to indefinite carryforward periods, (b) state NOL carryforwards of $6.1 million which will expire at various dates from 2026 to indefinite carryforward periods and (c) foreign NOL carryforwards of $19.7 million which will expire at various dates from 2021 to indefinite carryforward periods. Under Section 382 of the Internal Revenue Code, certain ownership changes limit the utilization of the NOL carryforwards, and the amount of federal NOL carryforwards recorded is the net federal benefit available.

    Other carryforwards include state research and development (“R&D”) tax credit carryforwards of $16.7 million, which have an indefinite carryforward period.

    A substantial portion of our manufacturing operations in Costa Rica operate under various tax holiday and tax incentive programs due to expire in whole or in part in 2027. Certain of the holidays may be extended if specific conditions are met. The net impact of these tax holiday and tax incentives was an increase to our net earnings by $8.0 million or $0.37 per diluted share in 2020 and by $7.8 million or $0.36 per diluted share in 2019.

Foreign currency translation adjustments, and related tax effects, are an element of “other comprehensive income” and are not included in net income other than the revaluation of the associated deferred tax asset due to the Tax Act.

    As of December 31, 2020, we have estimated $97.8 million of undistributed foreign earnings and profits. Such earnings were previously subject to U.S. tax as a result of the Tax Act and much of any future remittances would generally be subject to no U.S. tax as a result of dividends received deductions and/or foreign tax credit relief. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we incur significant additional costs upon repatriation of such amounts.

We are subject to taxation in the United States and various states and foreign jurisdictions. Our United States federal income tax returns for tax years 2017 and forward are subject to examination by the Internal Revenue Service. Our principal state income tax returns for tax years 2012 and forward are subject to examination by the state tax authorities. The total gross amount of unrecognized tax benefits as of December 31, 2020 was $18.4 million which, if recognized, would impact the effective tax rate. We believe that adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. As of December 31, 2020, it is not possible to estimate the amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We have not accrued any penalties or interest as of December 31, 2020 or December 31, 2019.

The following table summarizes our cumulative gross unrecognized tax benefits (in thousands): 

	Year Ended December 31,
	2020		2019		2018
Beginning balance	$	15,027	$	10,824	$	6,527
Increases to prior year tax positions	502		138		—
Increases to current year tax positions	2,987		4,231		4,536
Decreases to prior year tax positions	(15)		(3)		(146)
Decrease related to lapse of statute of limitations	(58)		(163)		(93)
Ending balance	$	18,443	$	15,027	$	10,824