Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes

Schedule of components of income tax expense (benefit)

Income tax expense (benefit) consisted of the following components (dollars in thousands):

	2017		2016		2015
Current:
Federal	$	(423)	$	(9,918)	$	5,731
State		1,072		(624)		(1,645)
Foreign		11,490		8,975		12,647
		12,139		(1,567)		16,733
Deferred:
Federal		25,797		(12,687)		13,665
State		7,694		(2,217)		2,570
Foreign		335		(851)		(3,312)
		33,826		(15,755)		12,923
Total	$	45,965	$	(17,322)	$	29,656

Summary of income before income taxes

Income (loss) before income taxes consisted of the following (dollars in thousands):

	2017		2016		2015
U.S.	$	(56,465)	$	(81,579)	$	51,797
Foreign		62,990		38,339		69,429
Total	$	6,525	$	(43,240)	$	121,226

Components of deferred income tax assets and liabilities

The components of the Company’s net deferred tax asset are as follows (dollars in thousands):

	2017		2016
Deferred tax assets:
Compensation and benefits	$	5,912	$	9,715
Net operating loss and capital loss carryover		18,974		19,755
Share-based compensation		5,092		6,824
Research and development credits		7,438		7,550
Foreign tax credits		11,117		12,660
Tax benefits on uncertain tax positions		831		1,351
Goodwill and other intangibles		6,363		8,015
Depreciation		3,527		1,167
Capitalized software		383		—
Rent		3,013		3,695
Other		700		1,564
Total deferred tax assets		63,350		72,296
Less: valuation allowance		(58,448)		(20,979)
Total deferred tax assets, net of valuation allowance		4,902		51,317
Deferred tax liabilities:
Capitalized software		—		(12,174)
Indefinite life intangible		(1,695)		—
Other		(55)		(455)
Total deferred tax liabilities		(1,750)		(12,629)
Net deferred tax assets	$	3,152	$	38,688

Summary of net operating loss carry forwards and respective expiration period

Net operating loss carryforwards expire as follows (dollars in thousands):

	Amount		Years remaining
Hong Kong and Australia	$	76,375	Indefinite
State and local (United States)		36,111	13 - 20 years
	$	112,486

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings

	2017		2016		2015
U.S. federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of U.S. federal income tax effect	0.6		5.2		0.4
Foreign tax impact, net	(81.8)		6.2		(7.2)
Deemed dividend on changes to internal capital structure outside North America (1)	—		—		5.4
Valuation allowance	585.8		—		—
Tax impact of Tax Cuts and Jobs Act	149.2		—		—
Stock windfall/shortfall	(13.5)		—		—
Impact of deductible basis on the sale of energy research business	—		—		(14.8)
Reserves released upon tax settlement	—		18.6		—
Non-deductible costs (2)	21.3		(22.8)		6.1
Other, net	7.9		(2.1)		(0.4)
Effective income tax rate	704.5	%	40.1	%	24.5	%

(1) Reflects the impact of the tax on a deemed dividend from changes to the internal capital structure of the Company's operations outside of North America.

(2) Includes the impact of the non-deductible payments in 2015 and charges accrued in 2016 payable to the Securities and Exchange Commission (the “SEC”) (see Note 21, Commitments and Contingencies). Additionally, 2017 and 2016 includes non-deductible officer’s compensation.

Reconciliation of the beginning and ending balances of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (dollars in thousands):

Uncertain Tax Benefits	2017		2016		2015
Balance, January 1	$	7,356	$	15,553	$	14,395
Additions based on tax positions related to the current year		591		66		2,807
Additions based on tax positions of prior years		4		406		349
Reductions for tax positions of prior years		(13)		—		(36)
Reductions due to settlements with taxing authorities		(64)		(2,153)		(1,773)
Reductions due to expiration of statute of limitations		(181)		(6,516)		(189)
Balance, December 31	$	7,693	$	7,356	$	15,553